Cal- 


THE  LIBRARY 

OF 

THE  UNIVERSITY 
OF  CALIFORNIA 

LOS  ANGELES 

SCHOOL  OF  LAW 

uitt  of 
beiiuer-Moss  Co* 


A  Manual  of 
The  Federal  Trade  Commission 


PRESENTING 

The  Origin,  Development  and  Construction  of  the  Anti- 
Trust  Laws,  with  Decisions  upon  the  Constitutional 
and  Unfair  Trade  Questions  Involved,  to- 
gether with  the  Rules  of  Practice, 
Forms,   Texts   of  Statutes, 
Debates  in  Congress 

AND 

Complete  Memoranda  of  Anti-Trust  Cases  Instituted 
by  the  United  States 


By 
RICHARD  S.  HARVEY 

of  the  New  York  Bar 
and 

ERNEST  W.  BRADFORD 

of  the  Washington,  D.  C.,  and  Indianapolis,  Intl.,  Bars 


WASHINGTON,  D.  C. 

JOHN  BYRNE  &  COMPANY 
1916 


Copyright,  1916 

by 
RICHARD  S.  HARVEY 

and 
ERNEST  W.  BRADFORD 


To 
HON.  THOMAS  EWING 

this  book 
is  respectfully  dedicated 


670B97 


PREFACE. 

If  the  Sherman  Anti-trust  Law  has  been  properly  described  as 
a  Magna  Charta  among  the  Anti-trust  statutes  of  the  United 
States,  it  appears  equally  proper  to  designate  the  Federal  Trade 
Commission  Act  and  the  Clayton  Law,  taken  together,  as  a  Busi- 
ness Constitution,  intended  to  afford  fair  and  impartial  protection 
to  the  commercial  interests  of  the  American  people. 

While  the  Sherman  Law  during  its  initial  period  was  somewhat 
neglected  as  a  weapon  against  the  forces  of  trade  restraint  and 
monopoly,  the  sweeping  nature  of  its  constitution-like  phrases 
gradually  made  it  all-embracing  in  its  prohibitions,  and  by  its 
means  a  campaign,  both  offensive  and  defensive,  was  carried  on  in 
the  people's  behalf  until  at  length  even  those  giants,  the  Standard 
Oil  and  Tobacco  trusts,  were  brought  before  the  court  and  com- 
pelled to  dismember  their  overgrown  corporate  organisms. 

That  there  are  tides  in  the  affairs  of  nations  as  well  as  of  men 
is  apparent  to  all;  and  it  is  equally  certain  those  tides  at  some 
seasons  progress  more  rapidly  than  at  others.  Such  a  season  in 
the  Anti-trust  movement  was  in  evidence  in  1889-90,  when  the 
framing  of  the  Sherman  Law  occupied  the  most  careful  attention 
and  scrutiny  of  such  statesmen  as  Senators  Sherman,  Edmunds, 
Hoar,  and  others. 

The  conscience  and  will  of  the  people  as  condensed  into  the 
space  of  the  eight  short  sections  comprised  in  the  Sherman  Law 
have  been  ably  and  impartially  interpreted  and  made  effective 
by  the  Supreme  Court;  and  while  that  tribunal  has  sometimes 
disclosed  a  divergency  in  views  of  its  individual  members,  the 
general  result  has  justified  the  confidence  reposed  in  that  court, 
which  alone  exists  by  warrant  of  a  constitutional  grant.  In 
some  of  the  Circuit  Courts  of  Appeal  a  halting  attitude  and  de- 
sire to  criticise  the  Sherman  law  and  to  minimize  its  restrictive 
influence  has  been  noticeable ;  but  in  the  clear  atmosphere  of  the 
Supreme  Court  the  subject  has  been  seen  in  plain  perspective  and 
from  every  angle. 

Even  in  the  disposition  of  the  Supreme  Court,  however,  there 
remained  one  element  of  doubt  and  uncertainty.  Whereas  in  the 
latest  Anti-trust  decisions  the  issues  are  treated  as  involving  only 
the  application  of  established  principles  for  their  solution,  and 


vi  PREFACE. 

the  rules  ably  and  comprehensively  set  forth  in  the  Standard  Oil 
and  Tobacco  cases  are  recognized  and  enforced  as  part  of  the 
law  of  the  nation, — still,  the  court  reserves  to  itself  the  right  and 
power  to  dispose  in  future  of  each  individual  case  as  it  arises,  in 
accordance  with  the  measure  of  monopolistic  tendencies  therein 
disclosed. 

The  situation,  therefore,  was  not  in  entire  accord  with  a  gov- 
ernment existing  under  a  written  constitution.  In  conditions 
where  Congress,  the  supreme  legislative  body,  had  deemed  the 
safety  and  continuance  of  commercial  freedom  of  the  citizen  at 
stake,  it  had  prohibited  certain  acts  and  combinations;  and  the 
Supreme  Court  had  decreed  that  in  each  instance  it  would  judici- 
ally scan  those  single  and  combined  acts  to  decide  for  itself 
whether  they  were  such  "undue  restraints"  as  in  "the  light  of  rea- 
son" amounted  to  an  infraction  of  the  law.  This  course,  it  was 
argued  in  Congress,  and  believed  by  many,  if  continued  and  unre- 
strained, might  in  time  grow  into  a  system  of  court  constructions 
akin  to  the  English  common  law,  and  we  should  thus  evolve  in 
the  United  States  an  anomaly  in  the  shape  of  an  unwritten  as 
well  as  a  written  constitution, — "a  wheel  within  a  wheel"  in  our 
governmental  machine.  Besides,  the  readjustment  of  certain  cul- 
prit organizations  had  been  turned  over  to  the  lower  courts  for 
their  supervision  of  that  task, — a  duty  which  partook  of  minis- 
terial rather  than  of  judicial  functions. 

It  was  likewise  brought  home  to  the  mind  of  the  nation  and  in 
turn  made  known  to  its  representatives  in  Congress  assembled, 
how  distracting  to  business  was  the  eternal  possibility  and  dan- 
ger of  a  government  prosecution  under  the  Sherman  Law,  and 
that  there  existed  a  necessity  for  a  permanent  board  or  com- 
mission which,  acting  in  accordance  with  appropriate  legislation, 
would  prevent  monopolistic  tendencies  at  their  source  and  in 
cases  of  wilful  neglect  or  disobedience  would  direct  and  enforce 
compliance  with  the  curative  decree.  In  brief,  it  was  seen  that 
the  Sherman  Law  was  inadequate  to  occupy  the  entire  Anti- 
trust field,  and  that  something  supplementary  thereto  was  re- 
quired for  the  adequate  regulation  of  business. 

At  this  juncture,  and  following  closely  upon  the  decisions  in 
the  Standard  Oil  and  Tobacco  cases,  the  Senate,  July  26th,  1911, 
adopted  a  resolution  authorizing  and  directing  the  Committee 
on  Interstate  Commerce  to  inquire  into  what  changes  were  "nec- 
essary or  desirable  in  the  laws  of  the  United  States  relating  to 


PREFACE.  vii 

the  creation  and  control  of  corporations  engaged  in  interstate 
commerce,"  with  directions  to  hold  sessions  and  to  report  to 
the  Senate  at  the  earliest  date  practicable.  The  hearings  ex- 
tended from  day  to  day  over  a  period  of  three  months  and  more 
than  one  hundred  persons  appeared  and  presented  their  views. 
The  report  and  the  extremely  able  debates  are  presented  in  sub- 
stance in  Appendix  J.  These  debates  disclose  a  deeper  insight 
into  Anti-trust  principles  and  policies  than  can  be  discerned  in 
the  Sherman  Law  discussion  in  1890, — which  is  to  say  that  the 
experiences  of  more  than  twenty  years  had  produced  a  riper 
knowledge  of  that  department  of  national  life.  It  remained,  how- 
ever, for  the  succeeding  Congress  to  enact  measures  calculated  to 
cause  offending  corporations  and  individuals  to  cease  and  desist 
from  unfair  methods  of  competition  in  commerce.  This  legisla- 
tion is  comprised  in  the  Federal  Trade  Commission  Act  and  the 
Clayton  Law. 

Already  a  use  has  been  found  for  the  supervising  powers  of 
the  Federal  Trade  Commission.  Under  a  Senate  Resolution — 
Senator  Gore,  Oklahoma,  September  28,  1914,  two  days  after 
the  creating  act  was  approved — that  Commission  is  now  engaged 
in  an  enquiry  as  to  the  manner  in  which  the  Standard  Oil  sub- 
sidiaries are  carrying  out  the  terms  of  the  final  decree  making 
effective  the  decision  of  the  Supreme  Court  handed  down  May 
15,  1911,  requiring  dissolution  of  that  trust. 

Under  the  power  to  investigate  trade  conditions  in  and  our 
commercial  relations  with  foreign  countries,  sessions  of  the  Com- 
mission have  been  held  at  various  commercial  centers,  and  these 
enquiries  and  conferences  promise  benefits  in  the  way  of  extend- 
ing our  export  trade. 

If  we  are  right  in  our  view  of  the  situation,  the  state  trials 
which  have  marked,  like  battlefields,  the  progress  of  the  prin- 
ciples exemplified  in  the  Sherman  Law,  will  now  grow  few  in 
number.  The  era  of  preventive  regulation  has  succeeded  to  the 
period  of  repression  and  punishment.  Let  us  look  forward  with 
confidence  to  the  era  of  prevention  becoming  also  the  era  of  peace 
and  good  will  in  the  American  business  world.  If  correct  princi- 
ples and  well  thought  out  rules,  are  sensibly,  impartially  and 
promptly  enforced,  the  average  business  man  should  now  find  a 
place  for  his  limited  capital  and  his  activities  such  as  has  not  ex- 
isted since  the  shadow  of  the  gigantic  trusts  fell  across  the  land. 


viii  PREFACE. 

The  various  Appendices  are  added  with  the  purpose  of  brin 
ing  the  Anti-trust  laws  within  one  cover,  and  joining  thereto 
convenient  form  access  to  the  measures  and  discussions  whi< 
contain  the  history  of  that  system  of  jurisprudence  down  to  tl 
date  of  the  enactment  of  the  Federal  Trade  Commission  A 
and  the  Clayton  Law.  Whether  the  election  of  Senators  1 
popular  ballot  will  mark  a  change  in  the  policy  or  the  personn 
of  that  body,  remains  to  be  seen ;  but  every  student  of  the  An 
trust  laws  will  be  thankful  for  and  appreciative  of  the  gre 
ability  of  the  men  who  in  the  Upper  Chamber  took  the  leadii 
part  in  these  debates  in  the  Fifty-first,  Sixty-second  and  Sixt 
third  Congresses. 

The  effort  to  make  the  various  Appendices  disclose  an  epiton 
of  the  history  and  condition  of  Anti-trust  legislation  is  due 
recognition  of  the  fact  that  in  the  absence  of  decisions  or  rulin 
the  officer  of  a  corporation  and  his  legal  adviser  must  look  to  tl 
source  of  this  system  of  laws  for  interpretation  and  guidanc 
It  is  the  belief  of  the  authors  that  the  available  material 
fully  set  forth  in  those  Appendices. 

Wherever  in  the  general  text  there  has  appeared  occasion  f 
their  views,  the  authors  have  set  their  version  forth,  as  in  du 
bound.  Such  views  are  an  incident  to  authorship.  No  statute 
or  other  obligation  rests  upon  them  to  produce  a  book ;  but  whi 
written  it  should  contain  their  views  upon  the  principal  poin 
The  reader  may  not  agree  with  those  views,  and  the  readei 
view  point  may  be  correct;  but  that  is  another  story. 

The  forms  cover  the  practice  as  laid  down  in  the  rules  ai 
will  be  sufficient  as  a  guide  in  ordinary  cases. 

It  has  not  been  found  practicable  to  include  such  necessari 
transient  matter  as  the  Terms  of  the  Commission,  but  inform 
tion  of  that  description  can  be  readily  secured. 

The  effort  of  preparing  this  work  has  been  reduced  by  tl 
assistance  afforded  through  prior  labors  of  writers  who  are  a 
thorities  on  the  Anti-trust  laws.    Among  these  we  would  specif 
Thornton, — A  Treatise  on  the  Sherman  Anti-Trust  Act. 
Eddy, — On  Combinations  . 
Noyes, — Intercorporate  Relations. 
Williams, — Laws  on  Trusts  and  Monopolies,  with  Authoriti< 

(official  publication). 
Joyce, — On  Monopolies. 
Walker, — History  of  the  Sherman  Law. 


PREFACE.  ix 

Beale  and  Wyman, — Article  on  Monopolies,  27  "Cyc." 

Much  useful  information  will  also  be  found  in : 
Cooke, — Combinations,  Monopolies  and  Labor  Unions,  2d  Edition. 
M?~tin, — Modern  Law  of  Labor  Unions. 
Rogers, — Good  Will,  Trade  Marks  and  Unfair  Trading. 
Butler  and  Lynde, — A  Review  and  Interpretation  of 'the  Clayton 
and  Federal  Trade  Commission  Laws. 

RICHARD  S.  HARVEY 

and 

ERNEST  W.  BRADFORD. 
January  10,  1916. 


TABLE  OF  CONTENTS. 

CHAPTER  I. 
NATURE  AND  LIMITATIONS  OF  COMPETITION  IN  TRADE. 

PAGE 

1.  Definition 1 

2.  Benefits  of  Right  to  Compete 1 

3.  Proper  Exercise  of  Right 1 

4.  To  Retain  Rights,  Assistance  Sometimes  Required 3 

5.  Government  Accords  Aid  to  Parties  Thus  Situated 3 

6.  New  Measures  and  Methods  Required 4 

7.  Advantages  of  Railroad  Rate  Regulation  5 

8.  Supervision  of  General  Business  Desired  5 

9.  Purpose  of  Recent  Legislation  7 

10.  Views  of  Leading  Authorities  Quoted 9 

11.  Remarks  on  Field  for  Commission  13 

CHAPTER  II. 

MONOPOLIES  AND  COMBINATIONS  TO  PREVENT  COM- 
PETITION. 

1.  Definition 15 

2.  Development  of  Anti-trust  Sentiment  15 

3.  Distinction  Between  Exclusive  Rights  and  Monopolies 16 

4.  Public  Interests  Protected   19 

5.  Constitutionality  of  New  Legislation  Seems  Assured  21 

CHAPTER  III. 

FEDERAL  TRADE  COMMISSION'S  FUNCTIONS. 

1.  As  a  Board  of  Inquiry 23 

2.  As  a  Judicial  Body  24 

CHAPTER  IV. 

PROHIBITIONS  UNDER  THE  CLAYTON  LAW. 

1.  Unfair  Price  Discrimination   28 

2.  Conditional  or  "Tying"  Contracts   29 

3.  Ownership  by  One  Corporation  in  the  Stock  of  Another 31 

4.  Interlocking  Directorates 32 

a.  Corporations   Generally    32 


XI 


xii  TABLE  OF  CONTENTS. 

PAGE 

b.  Provisions  as  to  Banks 33 

c.  Provisions  as  to  Common  Carriers  35 

CHAPTER  V. 

PROVISIONS  FOR  ENFORCEMENT;  PARTICULARLY,  PRO- 
CEDURE UNDER  SECTION  5  OF  THE  FEDERAL  TRADE 
COMMISSION  ACT,  AND  UNDER  SECTION  n  OF  THE 
CLAYTON  LAW,  TO  MAKE  EFFECTIVE  SECTIONS  2,  3, 
7,  AND  8,  OF  SAID  LAW. 

1.  Necessity  for  and  Means  of  Enforcement 37 

2.  Statutes  Differ  in  Important  Particular  38 

3.  Procedure  Before  Commission  Described  39 

4.  Congress  Prescribed  Only  Limited  Review  41 

5.  Commendatory  Rulings  Not  Part  of  Legislative  Plan  42 

6.  Service  of  Process  46 

CHAPTER  VI. 

BANKS,— PROVISIONS  RELATING  THERETO   CONTAINED 

IN: 

1.  Federal  Trade  Commission  Act  47 

2.  Clayton  Law 48 

CHAPTER  VII. 

COMMON  CARRIERS:     REGULATIONS  CONTAINED   IN: 

1.  Federal  Trade  Commission  Act  57 

2.  Clayton  Law   61 

CHAPTER  VIII. 

THE  SHERMAN  ANTI-TRUST  LAW;  ITS  ORIGIN,  HISTORY 
AND  THE  LEADING  CASES  THEREUNDER  CONSID- 
ERED. 

1.  Comprehensive  Language  Employed  

2.  Unlike  Constitution, — Framers  Did  Not  Expound  Law 

3.  Principles  and  Development 

4.  Occasion  for  Statutory  Relief  

5.  Various  Drafts  of  Measure  Considered  

6.  Supporting  Argument  in  Senate   

7.  Tentative  Measures  Considered   

8.  Scope  and  Effect  of  Law  as  Enacted 

9.  Constitutional  Questions  Settled  by  Supreme  Court 

10.  Benefits  from  Anti-trust  Act   

11.  Foreign  Anti-trust  Laws  Discussed  


TABLE  OF  CONTENTS.  xiii 

PACE 

12.  Commission  Law  and  Clayton  Law  Broaden  Means  of  Relief  ..  86 

13.  Narrowing  Argument  Examined  88 

14.  Definitions  of  "Commerce" 92 

15.  Congress  Supplements  Anti-trust  Decisions  94 

CHAPTER  IX. 

DEFINITIONS  OF  PERSON  AND  CORPORATION  AND  EX- 
TENT OF  (i)  INDIVIDUAL,  (2)  CORPORATE  LIABILITY, 
UNDER: 

1.  Federal  Trade  Commission  Act 97 

2.  Clayton  Law   99 

3.  Sherman  Law 103 

CHAPTER  X. 

SUITS  FOR  INJUNCTION  UNDER  THE  FEDERAL  TRADE 
COMMISSION  ACT  AND  THE  CLAYTON  LAW;  ALSO, 
SPECIAL  CONTEMPT  PROCEEDINGS. 

1.  Importance  of  Subject  Considered  Ill 

2.  Notice  in  Equity  Practice  112 

3.  Practice   Revised    113 

4.  Public  Interest  Conserved  under  Commission  Act 114 

5.  Clayton  Law  Provisions   115 

6.  Application  and  Hearing 117 

7.  Order  Must  be  Specific  118 

8.  Special  Limitations  in  Trade  Disputes  119 

9.  Contempt  Proceedings  Where  Disobedience  Involves  Criminal 

Act 120 

10.  Old  Forms  of  Contempt  Retained  122 

11.  Statutory   Limitation    One   Year;     Criminal    Proceedings    Not 

Barred   123 

'''-•  i*  •  ".  ;..    ,     •  t":   •  }   :'•       ij.fe.!h  :  VU! 

CHAPTER  XL 

ATCIONS  FOR  DAMAGES  UNDER  THE  PROVISIONS  OF 
THE  FEDERAL  TRADE  COMMISSION  ACT  AND  ANTI- 
TRUST LAWS. 

1.  Generally  as  to  Right  to  Bring  Actions 124 

2.  Right  Covers  All  Violations  of  Anti-trust  Laws 125 

3.  Sherman  Law  Provision  for  Triple  Damages  Re-enacted 126 

4.  Certain  Judgments  Prima  Facie  Evidence 128 

5.  Government  Suit  Extends  Statute  of  Limitations  128 

6.  Locus  of  Suit  128 

7.  Procedure  of  Service  Discussed 129 

8.  Attendance  of  Witnesses  Considered  .  130 


xiv  TABU;  OF  CONTENTS. 

CHAPTER  XII. 
CRIMINAL  PROVISIONS  OF  THE  ANTI-TRUST  LAWS. 

PA( 

1.  Federal  Trade  Commission  Act  1J 

2.  Clayton  Law   i; 

3.  Sherman  Law  1- 

4.  Wilson   Tariff  Law l< 

CHAPTER  XIII. 

IMMUNITY  OF  WITNESS  UNDER  FEDERAL  TRADE  CO& 
MISSION  ACT,  AND  THE  ANTI-TRUST  LAWS. 

1.  Immunity  Proceeds  from  Recognition  of  Constitutional  Rights  .  1! 

2.  Statutes  Recognize  said  Rights   '. 1! 

3.  Commission's  Orders  do  not  Confer  Immunity  li 

4.  Privilege  Does  Not  Extend  to  Corporations li 

5.  Purpose  of  Privilege  Stated li 

6.  Actual  Jeopardy  Must  be  Shown  1! 

7.  Witness  Must  Claim  Privilege  1! 

8.  Enquiring  Court  or  Body  Must  Possess  Jurisdictional  Powers  ...  1! 

9.  Further  Consideration  of  Immunity  Provisions  li 

10.  Application  of  Principle  li 

11.  Rulings  in  Immunity  Cases li 

CHAPTER  XIV. 

HISTORY  AND  APPLICATION  OF  PROVISIONS  OF  CLA^ 
TON  LAW  RELATING  TO  ENCOURAGEMENT  AND  PRC 
TECTION  OF  LABOR. 

1.  Inception  of  Sherman  Anti-trust  Act  II 

2.  Question  of  Exempting  Labor  Raised  ll 

3.  Opposing  Argument  by  Senator  Edmunds  ll 

4.  Exclusion  of  Labor  Provision  from  Sherman  Law li 

5.  Argument  Criticized K 

6.  Equality  of  Corporation  and  Labor  Union  Noted  11 

7.  Orderly  Organized  Labor  Should  be  Encouraged li 

8.  Leading  Decision  Quoted  1' 

9.  "Strike" — Usual  Means  of  Compulsion  1' 

10.  Right  to  Refuse  to  Deal 1' 

11.  "Boycott"    1' 

12.  Protection  Afforded  by  Sections  6  and  20  of  Clayton  Law 1' 

13.  Provisions  Separately  Examined   1' 

14.  Rights  of  Labor  Confirmed  li 


TABLE  OF  CONTENTS.  xv 

CHAPTER  XV. 

ANTI-TRUST  LAWS  IN  THEIR  RELATION  TO  PATENTS 
AND  COPYRIGHTS. 

PAGE 

1.  Origin  and  Purpose  of  Exclusive  Grants  185 

2.  Scope  of  Exclusive  Powers  Under  Patent  Laws  187 

3.  Copyright  Laws  as  Construed  Under  Anti-Trust  Statutes 193 

4.  Protection  of  Public  is  End  Sought  by  Anti-Trust  Laws 201 

CHAPTER  XVI. 

UNFAIR  TRADING  IN  RELATION  TO  TRADE-MARKS  AND 
TRADE  NAMES. 

1.  An  Ancient  Problem  206 

2.  Good  Will  a  Topic  of  Wide  Significance 207 

3.  Unfair  Trade  Methods   207 

4.  Deceptive  Words  and  Emblems  210 

5.  Imitators  Display  Endless  Ingenuity   218 

CHAPTER  XVII. 

UNFAIR  METHODS  AS  SEEN  IN  ABUSES  OF  CORPORATE 

CONTROL. 

1.  Unfair  Manipulation  and  Conduct 222 

2.  Unfair  Exercise  of  Voting  Power   228 

Rules  of  Practice  before  the  Commission  232 

Forms    236 

APPENDIX  A. 

Text  of  the  Federal  Trade  Commission  Act  246 

APPENDIX  B. 

Text  of  the  Clayton  Law  or  Supplemental  Anti-trust  Law 259 

APPENDIX  C. 

Text  of  the  Sherman  Law,  or  Federal  Anti-Trust  Law  279 

APPENDIX  D. 

Portions  of  Wilson  Tariff  Law 282 

APPENDIX  E. 

Statutory  Provisions  Creating  the  Bureau  of  Corporations 284 


xvi  TABLE  OF  CONTENTS. 

APPENDIX  F. 

pAG 

Provisions  of  Federal  Constitution  Applicable  to  Anti-trust  Laws  .      28 

APPENDIX  G. 

Portion  of  Sundry  Civil  Act,  1914,  Applicable  to  Restriction  of  Gov- 
ernment Actions  against  Labor  and  Agricultural  Organizations  28 

APPENDIX  H. 
Immunity  Provisions  28 

APPENDIX  I. 

Provisions  of  Judicial  Code  Referred  to  in  the  Federal  Trade  Com- 
mission Act,  and  Clayton  Laws ;  also  Provisions  Abolishing  the 
Circuit  Courts  of  the  United  States  39 

APPENDIX  J. 
Anti-Monopoly  Provisions  Contained  in  Panama  Canal  Act  29 

APPENDIX  K. 

Tentative  Forms  of  Sherman  Law  Submitted  to  the  Senate  for  the 

Fifty-first  Session  of  Congress  29 

APPENDIX  L. 
Expediting  Act  of  1910   30 

APPENDIX  M. 

Control  of  Corporations,  Persons  and  Firms  engaged  in  Interstate 

Commerce, — Senate  Report  No.  1326,  Sixty-second  Congress  ..      30 

APPENDIX  N. 

Regulation  of  Injunctions,  with  History  of  and  Remarks  Upon  Ex- 
isting Law  and  Practice, — Extracts  from  House  Report  No.  612, 
Sixty-second  Congress  33 

APPENDIX  O. 

An  Act  to  Regulate  Commerce, — Original  Interstate  Commerce  Act 

of  1887   34 

APPENDIX  P. 

Memoranda  of  Cases  Instituted  by  the  United  States  under  the  Anti- 
trust Laws 36 


TABLE  OF  CASES  CITED. 


[REFERENCES  ARE  TO  PAGES.] 


A.  B.  Dick  Co.  v.  Henry  (149  Fed. 

424,  see  also  Henry  v.  A.  B.  Dick 

Co.),  188,  190. 
Adair  v.  United  States  (208  U.  S. 

161),  193. 

Addystone  Pipe  &  Steel  Co.  v.  Unit- 
ed States  (175  U.  S.  211 ;  20  Sup. 

Ct.  96 ;  44  L.  Ed.  136,  affirming  85 

Fed.  171 ;  29  C.  C.  A.  141 ;  46  L. 

R.   A.   122;    54  U.   S.  App.  723, 

which  reversed  78  Fed.  712),  21, 

80,  149,  194. 
Alexander  v.  United  States  (201  U. 

S.  117;  26  Sup.  Ct.  356;  50  L,.  Ed. 

686),  163. 
Allen  v.  Riley  (203  U.  S.  347;    27 

Sup.  Ct.  95;    51  L.  Ed.  216,  af- 
firming 71  Kan.  378 ;   80  Pac.  952 ; 

114  Am.  Ct.  481),  195. 
American  Biscuit  Co.  v.  Klotz   (44 

Fed.  721),  87,  146. 
American  Federation  of  Labor  et  al. 

v.  Buck's  Stove  &  Range  Co.  (No. 

1916,  Cir.  Ct.  of  App.,   Dist.  of 

Columbia,     decided     March     11, 

1909),  182. 
American    Soda    Fountain    Co.    v. 

Green  (69  Fed.  333),  21. 
American  Tobacco  Co.  v.  Polacsek 

(170  Fed.  117),  215. 
American  Waltham  Watch   Co.  v. 

U.  S.  Watch  Co.  (173  Mass.  85; 

53  N.  E.  141;    73  Am.  St.  Rep. 

263;   43  L.  R.  A.  826),  212. 
Anheuser-Busch    Brewing    Assoc'n 

v.  Piza  (24  Fed.  149),  212. 
Arthur  v.  Oakes  (65  Fed.  310,  317; 

11  C.  C.  A.  209;  25  L.  R.  A.  414), 

173. 

B. 

Barnes  v.  Berry  (157  Fed.  883),  183. 
Barnes    v.    Chicago   Typographical 

Union  (232  111.  402 ;   83  N.  E.  932  ; 

14  L.  R.  A.  N.  S.  1150;    122  Am. 

St.  Rep.  129),  183. 


Bartholomew   v.   Austin    (85    Fed. 

359;   29  C.  C.  A.  568),  18. 
Bauer  &  Cie  v.  O'Donnell  (229  U. 

S.  1;  33  Sup.  Ct.  616;  57  L.  Ed. 

— ),  192,  199,  200. 
Beechley    v.    Mulville    (102    Iowa 

602),  20. 
Bell  v.  United  States    (163  U.   S. 

662),  164. 

Bennet,  In  re  (84  Fed.  324),  164. 
Berkowittz    v.    United    States    (93 

Fed.  452;    35  C.  C.  A.  379),  164. 
Blackwell  v.  Alibrell  (3  Hughes  [U. 

S.]  151;    3  Fed.  Cas.  No.  1,  475; 

14  Off.  Gaz.  633),  212. 
Blount  Mfg.  Co.  v.  Yale  &  Towne 

(166  Fed.  555),  192,  194. 
Bobbs-Merrill    Co.    v.    Snellenberg 

(131  Fed.  530),  198. 
Bobbs-Merrill   Co.   v.   Straus    (139 

Fed.   155,   affirmed  147  Fed.   15; 

77  C.  C.  A.  407;   15  L.  R.  A.  N.  S. 

766;    210  U.  S.  339;    28  Sup.  Ct. 

722;    52   L.   Ed.   1086),   192,   196, 

198,  199,  235. 


C. 


Carroll  v.  Greenwich  Ins.  Co.  (199 

U.  S.  401 ;   26  Sup.  Ct.  66 ;    50  L. 

Ed.  246,  reversing  125  Fed.  121), 

20. 
Centaur    Co.    v.    Killenberger    (87 

Fed.  725),  217. 
Chapman,  In  re    (166  U.  S.  661), 

158. 

Charitable  Corporations  v.  Sir  Rob- 
ert Sutton  (2d  Atkins  400),  125. 
Charles  E.  Hires  Co.  v.  George  A. 

Hires   (182  Pa.  St.  346;    37  Atl. 

1117),  217. 
Chas.  E.  Hires  Co.  v.  Consumers' 

Co.   (100  Fed.  809),  217. 
Charles    River    Bridge    v.    Warren 

River  Bridge  (11  Pet.  420;    9  L. 

Ed.    773,    938,    affirming    7    Beck 

344),  18. 


XV11 


XV111 


OF  CASES  CITED. 


[REFERENCES  ARE  TO  PAGES.] 


Chesapeake    &   Ohio   Fuel   Co.   v. 

United  States  (115  Fed.  610,  623; 

53  C.  C.  256,  affirming  105  Fed. 

93),  19. 
Chicago  Wall  Paper  Mills  Co.  v. 

General  Paper  Co.  (147  Fed.  491; 

78  C.  C.  A.  607),  20. 
Collier  v.  Jones  (66  Misc.  [N.  Y.] 

97;    120  N.  Y.  Suppl.  991,  modi- 
fied in  140  N.  Y.  App.  Div.  911; 

125  N.  Y.  Suppl.  1116),  217. 
Colman  v.  Crump   (70  N.  Y.  573, 

217. 
Columbian   Wire   Co.   v.   Freeman 

Wire  Co.  (71  Fed.  306),  21,  190. 
Com.  v.  Zacharias  (181  Pa.  St.  126, 

affirming  5  Pa.  Dist.  475),  17. 
Counselman  v.  Hitchcock   (142  U. 

S.  547 ;   12  Sup.  Ct.  195  ;   35  L.  Ed. 

1110;  reversing  44  Fed.  268),  156. 
"Cream  of  Wheat"  Case  (224  Fed. 

566,  28,  193. 

Crescent  City  Brewing  Co.  v.  Plan- 
ner (44  La.  Ann.  22;  10  South 

384),  223. 
Darcy  v.  Allen  (11  Coke  84;    Noy. 

173;  Moore  673;  8  Coke  125),  16, 

19,  72. 

D. 

"Danbury  Hat"  Case  (235  U.  S.  522, 
see  Loewe  v.  Lawler),  175. 

Dartmouth  College  v.  Woodward 
(4  Wheat  [17  U.  S.]  518-636;  4 
L.  Ed.  629),  18,  229. 

"Dick"  Case  (149  Fed.  424;  see 
Henry  v.  A.  B.  Dick  Co.),  188, 
19. 

Densbey,  etc.,  Collieries  v.  York- 
shire Miners'  Assoc'n  (75  L.  J. 
K.  B.  284),  183. 

Dr.  Miles  Medical  Co.  v.  John  D. 
Park  &  Sons  Co.  (220  U.  S.  373; 
31  Sup.  Ct.  376;  55  L.  Ed.  902, 
affirming  164  Fed.  803;  90  C.  C. 
A.  579),  192,  196. 

E. 

Estes  v.  Belford  (30  Off.  Gaz.  99), 

217. 
Estes   v.   Leslie    (27   Fed.   22;    23 

Blatch.  476;   29  Fed.  91),  217. 
Estes    v.   Williams    (21    Fed.    189, 

190),  217. 
Estes  v.  Worthington  (22  Fed.  822 ; 

23  Blatch.  65;    30  Fed.  465;    31 

Fed.  154;   24  Blatch.  371),  217. 


F. 


Farmers'  Loan  &  Trust  Co.  v.  Trus- 
tees of  N.  Y.  &  West  R.  R.  Co. 
(150  N.  Y.  410;  44  N.  E.  1043; 
34  L.  R.  A.  76;  55  Am.  St.  689), 
226. 

Febridge  v.  Wells  (4  Abb.  Pr.  N.  Y. 
144;  13  How.  Pr.  385),  216,  218. 

Fisher  Flouring  Mills  Co.  v.  Swan- 
son  (76  Wash.  649),  28,  194. 

Foot  v.  Buchanan  (113  Fed.  156), 
163. 

G. 

General  Electric  Co.  v.  Wise  (119 

Fed.  922),  21. 
George  v.  Central  R.  R.  Co.   (101 

Ala.  607;  14  South  752),  226. 
Gibbs  v.  Consolidated  Gas  Co.  (130 

U.  S.  396,  9  Sup.  Ct.  553,  32  L.  Ed. 

979),  20. 
Gildersleeve  v.  Lester  (68  Hun  [N. 

Y.]  532),  225. 
Gorrell     v.     Town     of     Newport, 

(Tenn.  Ch.  App.  120),  18. 
Great  Atlantic  &  Pacific  Tea  Co.  v. 

Cream  of  Wheat  Co.   (224  Fed. 

566),  28,  193. 

Greater  New  York  etc  Co.  v.  Bio- 
graph  Co.  (203  Fed.  39),  193. 
Green  v.  Hugo  (81  Tex.  452;   17  S. 

W.  79;    26  Am.  St.  824),  223. 
Greer,  Mills  &  Co.  v.   Stoller   (77 

Fed.  1),  115. 
Grice,  In  re  (79  Fed.  627),  193. 

H 

Haarstick  v.  Fox  (9  Utah  110;  33 

Pac.  351;    156  U.  S.  674),  224. 
Hale  v.  Henkel  (201  U.  S.  43,  66; 

26  Sup.  Ct.  370;    50  L.  Ed.  652, 

affirming  139  Fed.  496),  152,  156, 

157,  159,  160,  163. 
Harrison  v.  Maynard  etc.  Co.   (61 

Fed.  689;    10  C.  C.  A.  17;    26  U. 

S.  App.  99),  199. 
"Harvester"  Case   (214  Fed.  987), 

19,  79,  91,  93. 

Heaton-Peninsular  etc.  Co.  v.  Eu- 
reka Specialty  Co.  (77  Fed.  288; 

25  C.  C.  A.  267 ;   35  L.  R.  A.  728 ; 

47  U.  S.  App.  146,  160),  195. 
Heike  v.  United  States  (227  U.  S. 

131;    33  Sup.  Ct.  226;    57  L.  Ed. 

450,  affirming  192  Fed.  83,  112  C. 

C.  A.  615),  157,  159. 


TABLE  OF  CASES  CITED. 


XIX 


[REFERENCES  ARE  TO  PAGES.] 


Henry  v.  A.  B.  Dick  Co.  (224  U.  S. 

1;    32   Sup.   Ct.   364;    56   L.   Ed. 

645;   see  149  Fed.  424),  17,  19,  30, 

188,  198. 
Henry     Brill     Publishing     Co.     v. 

Smythe  (27  Fed.  914),  199. 
Higgins  v.  Lansingh   (154  111.  301; 

40  N.  E.  362),  225. 
Hires  v.  Consumers  Co.   (100  Fed. 

809),  217. 
Hires  v.   Hires    (182   Pa.   St.  346; 

37  Atl.  1117),  217. 
Hopkins   v.   Oxley   Stove   Co.    (83 

Fed.  912),  170. 
Howe  Scale  Co.  v.  Wyckoff   (198 

U.  S.  118,  137,  25  Sup.  Ct.  609,  49 

L.  Ed.  972),  214. 
Humphrey's  Homeopathic  Medicine 

Co.  v.  Wenz  (14  Fed.  250),  216. 


I. 


Insurance  Policies,  In  re  (7  Pa.  St. 
17),  20. 

"International  Harvester"  Case  (214 
Fed.  987),  79,  91,  93. 

Internat.  Silver  Co.  v.  Wm.  H. 
Rogers  Corp.  (66  N.  J.  Eq.  119; 
57  Atl.  1037),  213. 

Interstate  Commerce  Commission 
v.  Brimson  (154  U.  S.  447;  155 
U.  S.  3;  14  Sup.  Ct  1125;  15 
Sup.  Ct.  19;  38  L.  Ed.  1047;  39 
L.  Ed.  495;  reversing  53  Fed. 
476),  158. 

Interstate  Commerce  Commission 
v.  Harriman  (211  U.  S.  407),  158. 

Interstate  Commerce  Commission 
v.  Illinois  Central  R.  R.  Co.  (215 
U.  S.  452),  126. 

Interstate  Commerce  Commission 
v.  Humboldt  Steamship  Com- 
pany (224  U.  S.  474),  39,  98. 


J. 


Jacobus  v.  Am.   Min.  Water  Mch. 

Co.  (38  Mise  [N.  Y.]  371;   77  N. 

Y.  Supp.  898),  225. 
Joffe  v.   Evans    (70    [N.  Y.]    App. 

Div.   189;    75   N.  Y.   Supp.   257), 

216. 

K. 

"Knight"  Case  (156  U.  S.  1;  15 
Sup.  Ct.  249;  39  L.  Ed.  325,  af- 
firming 60  Fed.  934;  9  C.  C.  A. 


297;  24  L.  R.  A.  428;  17  U.  S. 
App.  466,  which  affirmed  60  Fed. 
306),  78,  82. 

Kilbourn  v.  Thompson   (103  U.  S. 
168),  158. 


L. 


Langan  v.  Francklyn   (29  Abb.  N. 

C.  [N.  Y.]  102),  225. 
Lare  v.  Harper  (30  C.  C.  A.  376), 

215. 
Lawler  v.  Loewe   (235  U.   S.  522, 

see  Loewe  v.  Lawler,   "Danbury 

Hat"  Case),  175. 
Locker   v.   American   Tobacco   Co. 

(121   [N.  Y.]   App.  Div.  443,  106 

N.  Y.  Supp.  115),  173. 
Loewe   v.    Lawler   "Danbury   Hat" 

Case   (235  U.  S.  522;    208  U.   S. 

274 ;    130  Fed.  633 ;    142  Fed.  216 ; 

148  Fed.  924;    187  Fed.  522),  175. 
Lonas  v.  State   (3  Heisk.   [Tenn.] 

287),  151. 
Louisville  Gas  Co.  v.  Citizens'  Gas 

Light  Co.  (115  U.  S.  683;   6  Sup. 

Ct.  265;   29  L.  Ed.  510,  reversing 

81  Ky.  263),  18. 
Lyons  v.  Wilkins  (67  L.  J.  ch.  383), 

183. 

M. 

McClure  v.  Law  (161  N.  Y.  78;   55 

N.  E.  388;   76  Am.  St.  262),  226. 
McCutcheon   v.   Merz   Capsule  Co. 

(71  Fed.  787;    19  C.  C.  A.  108; 

31  L.  R.  A.  415),  20. 
McGourkey  v.  Toledo  &  O.  C.  Ry. 

Co.   (146  U.  S.  536),  225. 
Mclntire  v.  Ajax  Mining  Co.    (17 

Utah  213 ;   20  id.  323 ;   28  id.  162 ; 

77  Pac.  613),  224. 
Macklem  v.  Fales   (130  Mich.  66), 

226. 
Martell  v.  White   (185  Mass.  255; 

69  N.  E.  1085;    64  L.  R.  A.  260; 

102  Am.  St.  Rep.  341),  176. 
Meredith  v.  New  Jersey  Zinc,  etc., 

Co.   (41  Atl.  116,  affirming  55  N. 

J.  Eq.  211;    222,  37  Atl.  539),  1. 
Merrimack  Mfg.  Co.  v.  Garner   (4 

E.    D.    Smith    [N.    Y.]    387;     2 

Abb.  Pr.  318),  216. 
Mines  v.  Scribner   (147  Fed.  927), 

1987 
Minnesota   v.    Northern    Securities 

Co.  (194  U.  S.  48;   2  Fed.  Anti- 
trust Dec.  533;    24  Sup.  Ct.  588; 


XX 


TABLE  off  CASES  CITED. 


[REFERENCES  ARE  TO  PAGES.] 


48  L.  Ed.  870 ;   reversing  123  Fed. 
692),  87,  115,  116. 
Munn  v.  Illinois  (94  U.  S.  113),  78, 
81. 

N. 

Nathan  v.  Louisiana   (8  How.   [U. 

S.]  73),  47. 
National  Biscuit  Co.  v.  Baker   (95 

Fed.  135),  215. 

National  Biscuit  Co.  v.  Ohio  Bak- 
ing Co.   (127  Fed.  127,  160;    195 

U.  S.  630),  215. 
National  Biscuit  Co.  v.  Swick  (121 

Fed.  1007),  215. 
National  Fireproofing   Company  v. 

Mason  Builders  Association  (169 

Fed.  259;    94  C.  C.  A.  535),  87, 

116,  184. 
National   Folding-Box,   etc.   Co.   v. 

Robertson     (99     Fed.     985;      43 

Weekly  Rep'r  156),  190. 
National  Harrow  Co.  v.  Hench  (76 

Fed.  667,   affirmed;    83  Fed.  36; 

27  C.  C.  A.  349),  191. 
National  Harrow  Co.  v.  Qaick  (67 

Fed.  130),  21. 
National  Lead  Co.  v.  Grote  Paint 

Store  Co.  (80  Mo.  App.  247),  20. 
National  Protective  Assoc.  v.  Gum- 
ming (170  N.  Y.  315,  326;    63  N. 

E.  369,  371;    58  S.  R.  A.  135,  140; 

88  Am.  St.  Rep.  648),  175. 
Nelson  v.  United  States  (201  U.  S. 

92;    26   Sup.   Ct.   358;    50  L.  Ed. 

773,  affirming  52  Fed.  646),  152, 

163. 
New  Orleans  v.  Hoyle  (23  La.  Ann. 

740),  18. 
New      Orleans      Butchers'      Union 

Slaughter    House,     etc.,     Co.    v. 

Crescent  City  Livestock  Landing, 

etc.,  Co.    (Ill  U.  S.  749;    4  Sup. 

Ct.  265;    28  L.  Ed.  585),  18. 
New    Orleans    Gas    Light    Co.    v. 

Louisiana  Light,  etc.,  Co.  (115  U. 

S.  650;    6  Sup.  Ct.  252,  29  L.  Ed. 

516),  18. 
New  York  Life   Insurance   Co.   v. 

Deer  Lodge  County   (231   U.   S. 

498),  47. 
Northern   Securities  Co.  v.  United 

States    (193   U.   S.  197;    24   Sup. 

Ct.  436;    48  L.  Ed.  679;    affirm- 
ing 120  Fed.  721),  21,  32,  80,  149, 

230. 


o. 


Olsen  v.  Smith  (195  U.  S.  332;  25 
Sup.  Ct.  52;  49  L.  Ed.  224;  af- 
firming [Texas  Civ.  App.]  68  S. 
W.  320),  17. 

Otis  Elevator  Co.  v.  Geiger  (107 
Fed.  131),  190. 

Over  v.  Byram  Foundry  Co.  (77  N. 
E.  302  [Ind.  App.  1906]),  19. 

Oxford  University  v.  Wilmore- 
Andrews  Pub.  Co.  (101  Fed. 
443),  212. 


P. 


Pacific  Factor  Co.  v.  Adler  (90  Cal. 

110;   27  Pac.  36,  25  Am.  St.  102), 

20. 
Pacific  Railways  Commission,  In  re 

(32  Fed.  241),  158. 
Pasteur  Vaccine  Co.  v.  Burkey  (22 

Tex.    Civ.   App.   232;     54   S.    W. 

804),  20. 

Paul  v.  Virginia  (8  Wall.  168),  47. 
People  v.  City  Prison  Warden  (144 

N.  Y.  529;    30  N.  E.  686;    27  L. 

R.  A.  718),  17. 
People  v.   North  River   Sugar  Co. 

(121   N.  Y.   582;     24   N.   E.  834; 

9  L.  R.  A.  33;    18  Am.   St.  843, 

affirming  2  Abb.   N.   C.   164;    54 

Hun  355;    3  N.  Y.  Supp.  401;    2 

L.  R.  A.  33),  81. 
People  v.  Sheldon,  139  N.  Y.  251; 

54  N.  Y.  St.  Rep'r  513;    34  N.  E. 

785;    23  L.  R.  A.  221;    36  A.  St. 

Rep.  690),  1. 

Perry  v.  Truefitt  (6  Beav.  66),  209. 
Pickett  v.  Walsh   (192  Mass.  572; 

78  N.  E.  753 ;    6  L.  R.  A.  [N.  S.] 

1067;     116    Am.    St.    Rep.    272); 

42  American  Law   Review  706), 

174. 

Pidding  v.  How  (8  Sim.  477),  209. 
Piddock    v.    Harrington    (64    Fed. 

821),  115. 
Pillsburg-Washburn     Flour     Mills 

Co.  Ltd.  v.  Eagle    (86  Fed.  608; 

30  C.  C.  A.  386 ;    41  L.  R.  A.  162, 

reversing  82  Fed.  816),  212. 
Poultney,  ex  parte  (4  Peters  C.  C. 

C.  472),  113. 

Q. 

Queen  Ins.  Co.  v.  State  (86  Texas 
253;  24  S.  W.  397;  22  L.  R.  A. 
483,  reversing  22  S.  W.  1048),  20. 


TABLE  of  CASES  CITED. 


xxi 


[REFERENCES  ARE  TO  PAGES.] 


Reddaway  v.   Banham  XApp.   Cas. 

199 ;   65  L.  J.  Queen's  Bench  381 ; 

74    L.    T.    Rep.    N.    S.    289;     44 

Weekly   Rep.   638;     13   R.    P.   C. 

218),  215. 
Reynolds  v.  Davis  (198  Mass.  294; 

84  N.  E.  457;    17  L.  R.  A.  N.  S. 

162),  174,  183. 

Royal  Baking  Powder  Co.  v.  Royal 
(122  Fed.  337;  58  C.  C.  A.  499), 
213. 


S. 


Scheuer  v.  Muller  (74  Fed.  225;   20 

C.  C.  A.  165),  215. 
Singer  Mfg.  Co.  v.  June  Mfg.  Co. 

(163  U.  S.  169;    16  Sup.  Ct.  1002; 

41  L.  Ed.  118),  216. 
Standard  Oil  Co.  v.  United  States 

(221   U.   S.   1;    31   Sup.   Ct.   502; 

55  L.  Ed.  619;    34  L.  R.  A.   [N. 

S.]  834,  modifying  173  Fed.  177), 

19,  93,  146,  193. 
Standard     Sanitary    Mfg.     Co.    v. 

United  States  (226  U.  S.  20;    33 

Sup.  Ct.  9;    57  L.  Ed.,  affirming 

191  Fed.  172),  19,  191,  194. 
State  v.  Armrur  Packing  Co.   (173 

Mo.  356 ;   73  S.  W.  645 ;   61  L.  R. 

A.  464;    96  Am.  St.  515),  1. 
State  v.    Murphy    (128   Wis.   201), 

157. 

State  v.  Rudolph  (128  Wis.  222), 
157. 

State   v.  Wilcox    (64   Kansas  789; 

68  Pac.  634),  17. 
Strait  v.  National  Harrow  Co.   (51 

Fed.  819),  21. 
Straus     v.     American     Publishing 

Assoc'n    (177  N.  Y.  473;    69  N. 

E.   1107;    64  L.   R.   A.   701;    101 

Am.  St.  819;    affirming  93  N.  Y. 

App.  Div.  86,  N.  Y.  Supp.  1091), 

194,  198. 

T. 

Texas  &  Pacific  Ry  Co.  v.  Abilene 
Cotton  Oil  Co.  (204  U.  S.  426), 
126. 

Thomas  v.  Cincinnati,  N.  O.  &  T. 
P.  Ry.  Co.  (62  Fed.  803),  174. 


Tobin  Canning  Co.  v.  Frazer  (81 
Tex.  407;  17  S.  W.  25),  223. 

Toledo,  etc.,  Ry.  Co.  v.  Penna.  Co. 
(54  Fed.  730;  19  L.  R.  A.  387), 
177. 

U. 

United  Shoe  Machinery  Co.  v.  La 

Chapelle    (212   Mass.   67;    99  N. 

E.  289),  187. 
United   States   v.   Addystone   Pipe, 

etc.,  Co.    (85  Fed.  271,  806,  814; 

29  C.  C.  A.  141;    54  U.   S.  App. 

723;    46  L.  R.  A.  122,  reversing 

78  Fed.  712;    affirmed  175  U.  S. 

211;    20  Sup.  Ct.  96;    44  L.  Ed. 

136),  146,  149,  203. 
United   States   v.   American   Naval 

Stores   Co.    (172    Fed.   455;     186 

Fed.  592),  15. 
United  States  v.  American  Tobacco 

Co.    (221  U.  S.  66;    31  Sup.  Ct. 

648;     55   L.    Ed.    694;     reversing 

164  Fed.  700),  19,  93,  146. 
United    States    v.    Armour    &    Co. 

(142  Fed.  808),  155,  157,  158,  162, 

163. 
United  States  v.  Debs   (158  U.  S. 

564;     15    Sup.    Ct.   900;     39   Fed. 

1092),  175. 

United  States  v.  Heike   (227  U.  S. 

131),  157,  159. 
United  States  v.  Hermison  (26  Fed. 

Cas.  No.  15,  308;   3  Sawyer  556), 

164. 
United  States  v.  Int.  Harvester  Co. 

(214  Fed.  987),  19,  79,  91,  93. 

United  States  v.  E.  C.  Knight  Co. 
(156  U.  S.  1;  15  Sup.  Ct.  249; 
39  L.  Ed.  325,  affirming  60  Fed. 
934;  9  C.  C.  A.  297;  24  L.  R.  A. 
428 ;  17  U.  S.  App.  466,  which  af- 
firmed 60  Fed.  306),  78,  82. 

United  States  v.  Northern  Securi- 
ties Co.  (193  U.  S.  197;  24  Sup. 
Ct.  436 ;  48  L.  Ed.  679 ;  affirming 
120  Fed.  721),  21,  32,  80,  149, 
230. 

Uuited  States  v.  Standard  Sanitary 
Mfg.  Co.  (187  Fed.  229;  191  Fed. 
172,  affirmed  226  U.  S.  20;  33 
Sup.  Ct.  9;  55  L.  Ed.;  57  L. 
Ed.)  19,  161,  191. 

United  States  v.  Swift  (186  U.  S. 
1002),  158. 


XX11 


TABI,E  OF  CASES  CITED. 


[REFERENCES  ARE  TO  PAGES.] 


United  States  v.  Terminal  R.  Asso- 
ciation of  St.  Louis,  148  Fed.  487, 
reversed  154  Fed.  268),  160. 

United  States  v.  Trans-Missouri 
Freight  Assoc'n  (166  U.  S.  290; 
17  Sup.  Ct.  540;  41  L.  Ed.  1007, 
reversing  58  Fed.  58;  7  C.  C.  A. 
15;  19  U.  S.  App.  36;  54  L.  R. 
A.  73;  4  Interstate  Com.  Rep. 
443,  which  reversed  53  Fed.  440), 
19,  49,  116. 

United  States  v.  Union  Pacific  Rail- 
road (226  U.  S.  306;  33  Sup.  Ct. 
53 ;  57  L.  Ed.,  reversing  188  Fed. 
116),  79,  91,  93. 


V. 


Vegelahn  v.  Guntur  (167  Mass.  92; 
44  N.  E.  1077;  35  L.  R.  A.  722; 
57  Am.  St.  Rep.  443),  182. 

W. 

Walla  Walla  v.  Walla  Walla  Water 

Co.  (192  U.  S.  1;   19  Sup.  Ct.  77; 

43  L.  Ed.  341),  18. 
Waterhouse  v.  Corner,  55  Fed.  149 ; 

19  L.  R.  A.  403),  175. 
Wilbur  v.  Stopel  (82  Mich.  344;   46 

N.  W.  724;   21  Am.  St.  568),  224. 
Wood  v.  Whitehead  Bros.   (165  N. 

Y.  545,  550),  81. 


CHAPTER  I. 

NATURE  AND  LIMITATIONS  OF  COMPETITION  IN 

TRADE. 

1.  Definition. 

2.  Benefits  of  Right  to  Compete. 

3.  Proper  Exercise  of  Right. 

4.  To  Retain  Rights,  Assistance  Sometimes  Required. 

5.  Government  Accords  Aid  to  Parties  Thus  Situated. 

6.  New  Measures  and  Methods  Required. 

7.  Advantages  of  Railroad  Rate  Regulation. 

8.  Supervision  of  General  Business  Desired. 

9.  Purpose  of  Recent  Legislation. 

10.  Views  of  Leading  Authorities  Quoted. 

11.  Remarks  on  Field  for  Commission. 

1.  DEFINITION. 

Competition  Judicially  Defined. — The  term  competition  in 
commerce  or  trade  has  been  denned  as  that  series  of  acts  or  course 
of  conduct  which  is  the  result  of  the  free  choice  of  the  individual 
and  not  of  any  legal  or  moral  obligation  or  duty.1 

2.  BENEFITS  OF  RIGHT  TO  COMPETE. 

Beneficial  Effect  in  Practice. — In  practice  it  leads  to  important 
results,  because  the  self-interest  of  the  individual  when  exercised 
in  an  untrammelled  manner  inures  to  the  benefit  of  all.  Such  at 
least  is  the  theory  of  competition;  and  its  influence  and  stimu- 
lating effect  have  occasioned  the  familiar  saying  "competition  is 
the  life  of  trade."  The  value  of  competition  to  the  state  has 
been  recognized  by  authority,  for  "the  courts  have  acted  upon 
and  adopted  this  maxim  [competition  is  the  life  of  trade]  in  pass- 
ing upon  the  validity  of  agreements,  the  design  of  which  was  to 
prevent  competition  in  trade,  and  have  held  such  agreements  to  be 
invalid."2 

3.  PROPER  EXERCISE  OF  RIGHT. 

Limitations  of  Right  to  Compete. — But  freedom  in  competi- 

1  Meredith  v.  New  Jersey  Zinc,  Etc.,  Co.,  41  Atl.  116,  affirming  55  N.  J. 
Eq.  211,  222,  37  Atl.  539. 

2  People  v.  Sheldon,  139  N.  Y.  251,  263,  54  N.  Y.  St.  Rep'r  513,  34  N.  E. 
785,  23  L.  R.  A.  221;   quoted  in  State  v.  Armour  (1903),  173  Mo.  356;  73 
S.  W.  645,  652;  61  L.  R.  A.  464;  96  Am.  St.  515. 

i 


2  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

tion  like  other  forms  of  liberty  has  limitations  beyond  which  it 
degenerates  into  license,  and  unrestricted  trade  has  brought  about 
situations  where  the  state  has  been  compelled  to  intervene,  in  the 
public  interest. 

Tendency  of  Unrestricted  Exercise  of  Power  Shown. — Per- 
haps the  simplest  and  most  concrete  example  of  the  tendency  of 
unrestricted  competition  to  work  out  oppression  is  seen  in  the 
record  of  the  relations  of  capital  to  labor. 

With  the  abolition  of  slavery  and  serfdom  in  the  first  half  of 
the  nineteenth  century,  willing  service  remained  as  the  only 
recognized  method  of  employment  throughout  the  civilized  world. 
But  with  the  removal  of  the  various  forms  of  enforced  labor,  no 
system  of  mutual  moral  obligation  was  substituted  in  their  stead. 
Such  an  obligation  on  the  part  of  the  capitalist  was  habitually  ig- 
nored or  denied,  and  the  laborer  in  his  turn  when  so  disposed  by 
self  interest  entered  upon  each  task  intent  upon  reducing  his  out- 
put to  prolong  his  work,  or  to  minimize  the  fruits  of  a  bargain  he 
realized  to  be  oppressive. 

English  Experience. — In  England  farm  laborers  breakfasting 
on  thin  broth  and  dining  on  bread  and  cheese,  without  meat  more 
than  once  a  week,  worked  from  sunrise  to  sundown,  while  in  the 
manufacturing  centres  the  life  and  surroundings  of  workmen 
were  more  burdensome  than  the  conditions  imposed  on  criminals 
engaged  upon  enforced  labor  in  prisons.  Women  and  little  chil- 
dren dragged  loaded  coal  trucks  along  dripping  tunnels  in  mines 
ten  to  sixteen  hours  a  day;  one  quarter  of  the  population  of 
London  lived  in  poverty,  and  public  or  private  charity  was  the 
precarious  dependence  of  one  thirty- fourth  of  the  entire  population 
of  England  and  Wales.  Education  of  the  working  class  was 
neglected,  and  the  natural  results  of  such  an  unregulated  condition 
of  competition  for  employment  were  the  twin  burdens  of  society, 
— pestilence  and  crime. 

In  America  Similar  Causes  Threaten  Similar  Results. — In 
the  United  States,  a  somewhat  similar  condition  formerly  existed, 
excepting  that  the  pauperism  of  the  American  poor  never  took  on 
the  hopeless  condition  which  prevails  in  an  atmosphere  where 
the  good  things  of  life  are  reserved  for  a  favored  few,  and  arti- 
ficial barriers  of  birth  and  aristocracy  make  it  difficult  to  rise  to  a 
higher  stratum  of  human  life  and  effort. 

It  is  hard  to  realize  that  up  to  sixty  years  ago  no  effort  to  re- 
strict child  labor  had  been  initiated  in  America,  and  that  in  Penn- 


NATURE  AND  LIMITATIONS  OF  COMPETITION.  3 

sylvania  lads  of  fourteen  years  worked  for  nine  hours  each  day 
in  air  so  polluted  with  coal-dust  that  nature  could  not  remove  these 
impurities  from  throat  and  lungs  for  twenty- four  hours  thereafter. 
In  tenements  of  the  great  cities  women  trod  sewing  machines  in 
"sweat-shops"  ten  to  fifteen  hours  at  a  stretch,  until  the  exhaus- 
tion of  mind  and  body  rendered  motherhood  impossible.3 

4.  TO  RETAIN  RIGHTS,  ASSISTANCE  SOMETIMES  RE- 
QUIRED. 

Weaker  Party  Cannot  Always  Compete. — Of  course  it  was 
theoretically  possible  for  the  employee  to  demand  changed  con- 
ditions and  in  default  of  such  amelioration,  to  refuse  to  continue 
the  engagement;  but  in  the  press  of  unrestricted  competition, 
with  other  hands  grasping  for  the  means  of  subsistence,  and  with 
dependent  families  looking  to  the  daily  wage  for  their  support, 
the  workman  had  no  actual  choice  but  to  remain  at  his  task,  trust- 
ing to  the  state  to  surround  it  with  such  conditions  as  would  safe- 
guard his  health  and  prospects,  in  furtherance  of  the  common 
good. 

In  Such  Cases  Government  Must  Intervene. — Modern  legis- 
lation with  what  for  lack  of  a  better  term  we  shall  designate  in- 
telligent paternalism  has  obliterated  or  modified  these  hard  con- 
ditions formerly  prevailing  between  employer  and  employee ;  and 
competition  in  employment,  to  the  permanent  advantage  of  every 
interest,  has  now  become  competition  as  regulated  and  restricted 
by  law. 

Above  Statement  Illustrates  Principle  Involved. — While 
these  remarks  may  be  regarded  by  some  as  a  digression,  no  apolo- 
gy is  offered  for  their  inclusion  here.  The  same  intrusion  of  social 
science  into  everyday  affairs  is  seen  in  many  quarters,  as  will 
abundantly  hereafter  appear. 

5.  GOVERNMENT    ACCORDS    AID    TO    PARTIES    THUS 
SITUATED. 

Government  Intervenes  against  Restrictive  Combinations. — 
In  the  world  of  business,  conditions  similar  to  those  existent  in 
affairs  of  labor  prevailed  in  America  down  to  a  compara- 
tively recent  period.  It  is  true  that  in  this  couutry,  in  and  since 

3  An  Industrial  Revolution,  by  Lyman  Abbott,  May,  1915;  The  Out- 
look, Vol.  no,  No.  4. 


4  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

Colonial  days,  rigid  laws  have  been  in  force  against  combinations 
and  contracts  in  restraint  of  trade ;  but  the  equally  deadly  prac- 
tices of  intensive  competition  itself,  viz:  rebates,  underhand 
methods  of  diverting  a  competitor's  trade,  "dumping,"  etc.,  were 
not  within  the  purview  of  the  restrictive  statutes,  and  business  be- 
came at  length  so  honeycombed  with  special  interests  and  acts  of 
favoritism  that  the  country  rose  in  revolt,  and  the  statutes  creating 
the  Interstate  Commerce  Commission  and  the  Sherman  Law  were 
enacted  in  a  determined  effort  to  cope  with  this  dangerous  and 
growing  evil. 

These  statutes  have  reduced  to  subjection  to  law  many  power- 
ful interests  and  combinations  which  by  hidden  means  and  unfair 
methods  were  absorbing  the  trade  of  the  country  in  their  particu- 
lar lines.  The  benefit  has  been  apparent ;  but  there  remained  a 
multitude  of  pernicious  practices  which  the  provisions  for  state- 
instituted  proceedings  and  the  right  to  individuals  to  bring  actions 
for  three- fold  damages  did  not  and  in  the  nature  of  things  could 
not  reach  and  obliterate. 

6.  NEW  MEASURES  AND  METHODS  REQUIRED. 

Business  Interests  Demand  That  Destructive  Competition 
Shall  Also  Be  Restrained. — Thinking  men,  including  our  high- 
est class  of  merchants  and  producers,  have  been  devoting  their 
careful  attention  to  the  situation  before  and  about  them,  realizing 
that  a  contented  and  prosperous  community  can  be  created  and 
maintained  only  upon  a  basis  of  plain  dealing,  and  that  the  great 
body  of  citizens  will  welcome  an  adjustment  of  these  problems 
along  permanent  lines.  It  was  very  natural  that  the  study  of  con- 
ditions should  lead  them  into  a  comparison  of  the  situations  be- 
fore and  after  the  institution  of  the  Interstate  Commerce  Com- 
mission, and  include  a  critical  examination  of  the  results  which 
flow  from  competition  when  regulated  by  law. 

In  former  times — as  with  labor — the  railroads  and  other  com- 
mon-carriers were  entirely  free  to  compete  where  and  when  they 
chose,  and  rebates  to  large  or  favored  patrons,  cut-rates,  free 
haulage  at  terminals,  etc.,  were  common  practice.  As  in  evolu- 
tion, the  survival  of  the  fittest — and  its  equally  inexorable  coun- 
terpart, the  elimination  of  the  unfittest — led  to  the  rapid  absorp- 
tion of  the  smaller  enterprises  as  well  as  those  without  strategic 
position ;  and  when  that  process  had  run  its  course,  a  "war  of  the 


NATURE  AND  LIMITATIONS  OF  COMPETITION.  5 

Titans"  brought  competitive  rates  to  a  point  where  as  was  disclosed 
in  a  public  examination  "the  freight  did  not  pay  for  the  axle- 
grease."  In  brief,  it  transpired  that  whereas  "competition  is  the 
life  of  trade," — that  feature,  in  railroad  circles  as  in  the  affairs  of 
labor,  demanded  that  the  state,  in  the  public  interest,  should  in- 
tervene, and  should  lay  down  certain  rules  and  regulations,  and 
should  in  the  exercise  of  its  plenary  authority  under  its  general 
powers,  interdict  and  declare  illegal  all  competition  which  is  de- 
structive in  its  ultimate  effect. 

Demand  Is  General. — The  study  of  conditions  referred  to 
above  has  progressed  so  rapidly  and  so  far  that  the  opinion  has 
become  quite  general  that  the  power  to  regulate  competition 
between  common  carriers  could  and  should  be  extended  to  trade 
and  commerce  in  general  and  that  an  interstate  board  of  control 
would  create,  in  time,  a  code  of  business  ethics  that  would  crys- 
tallize about  the  restrictive  statutes  and  in  the  end  prevent  in  a 
large  degree  if  not  entirely  the  unfair  methods  of  competition 
which  have  resulted  (in  the  larger  cases)  in  proceedings  under 
the  Sherman  Law. 

7.  ADVANTAGES  OF  RAILROAD  RATE  REGULATION. 

Benefits  of  Rate-Regulation  Shown. — Under  present  con- 
ditions, the  railroads  extending — to  cite  an  instance — from  Chi- 
cago to  New  York,  New  Orleans  or  San  Francisco,  must  each 
compete  under  rates  fixed  by  authority,  upon  a  basis  of  the  dis- 
tance travelled  and  service  performed ;  and  rapidity  and  certainty 
of  delivery  and  other  relative  advantages  and  conveniences  to 
shippers  are  the  deciding  factors,  in  attracting  business  to  par- 
ticular lines.  Here  competition  has  a  legitimate  field,  which  in 
its  turn,  leads  to  improvements  to  retain  and  attract  trade ;  and 
all  at  a  rate  which  has  been  fixed  at  a  figure  intended  to  insure  fair 
returns  upon  the  investment  involved,  with  the  result  that  few  if 
any  railroad  managers  would  return  if  they  could,  to  the  period 
when  independent  action  and  unrestricted  competition  was  the 
prevailing  rule. 

8.  SUPERVISION  OF  GENERAL  BUSINESS  DESIRED. 

Evolution  of  Existing  Sentiment. — It  is  true  that  those  capi- 
talists and  persons  in  charge  of  large  producing  interests  who  are 
now  advocating  competition  under  provisions  guaranteeing  uni- 


6  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

form  conditions  for  all  concerned,  have  not  arrived  at  their  pres- 
ent view  point  without  travelling  other  paths  in  search  of  an 
unrestricted  outlet  for  their  several  products.  Efforts  to  restrain 
trade  and  to  control  markets  in  the  '703  and  early  '8os  were  evi- 
denced by  pools  and  "gentlemen's  agreements" ;  later,  the  trust 
and  then  the  holding  company  came  into  general  use  for  this  pur- 
pose, and  with  the  adverse  ruling  in  1904  in  the  Northern  Securi- 
ties case  came  the  era  of  creating  vast  combinations  to  hold  the 
title  to  allied  industries,  at  first  hand.  The  last  expedient  had  the 
advantage — or  disadvantage — of  placing  ownership  where  the  re- 
sponsible persons  could  be  located  and  reached  by  the  state  in 
anti-trust  litigations  to  remove  restraints  of  trade ;  and  weary  of 
seeking  to  combat  or  circumvent  the  popular  will,  the  flag  of  truce 
has  been  raised,  and  peace  seems  at  last  assured. 

National  Commercial  Conference  Convened. — President 
Taft,  in  response  to  the  sentiment  of  the  country  and  with  pro- 
phetic vision,  early  in  1912  issued  a  call  for  a  National  Commercial 
Conference  to  be  held  in  Washington ;  and  in  response  there  as- 
sembled a  gathering  of  six  hundred  delegates  representing  com- 
mercial bodies  in  all  but  one  State  in  the  Union,  and  there  were 
present  also  delegates  from  the  Philippine  Islands,  Porto  Rico, 
Hawaii,  and  from  bodies  of  American  merchants  residing  in 
foreign  cities,  as  well.4 

The  key-note  in  the  President's  call  is  found  in  the  words: 
"How  can  business  and  the  National  Government  be  brought  to- 
gether in  a  broad  national  co-operation  that  will  aid  both  busi- 
ness and  the  Government  ?" 

Investigation  by  Congress  Begun. — Congress  was  also  alert 
and  active,  and  under  the  resolution  of  July  26,  1911,  the  Senate 
Committee  on  Interstate  Commerce  was  already  holding  that 
series  of  open  hearings  which  continued  from  day  to  day  until 

4  Among  the  results  of  the  Conference  was  the  organization  of  The 
Chamber  of  Commerce  of  the  United  States  of  America.  This  association 
represents  numerous  interests,  and  by  valuable  addresses  and  published 
articles  has  done  much  to  direct  public  opinion.  By  affording  Committees 
of  Congress  the  benefit  of  expert  advice  by  men  of  standing  and  experi- 
ence, it  has  been  instrumental  in  removing  prejudices  and  in  nullifying  the 
practice  of  maintaining  a  paid  lobby  at  the  capitol. 

For  useful  information  on  anti-trust  legislation,  see  printed  Report  of 
Speeches  delivered  at  its  Second  Annual  Meeting  February  12,  1914,  issued 
by  the  association. 


NATURE  AND  LIMITATIONS  OF  COMPETITION.  7 

the  expressions  of  more  than  one  hundred  representative  citizens 
had  been  embodied  in  the  record  of  its  proceedings,  culminating  in 
the  notable  debate  upon  the  proposed  Interstate  Trade  Commission 
Bill,  which  Senator  Newlands  introduced  in  the  committee's  be- 
half.5 

9.  PURPOSE  OF  RECENT  LEGISLATION. 

Policy  of  Regulating  Competition  Instead  of  Restraining 
Monopoly,  Inaugurated. — Upon  the  advent  of  President  Wil- 
son's administration  he  seized  the  opportunity  in  January,  1914, 
to  send  a  message  to  Congress  wherein  he  outlined  a  programme 
for  regulating  competition  and  urged  the  creation  of  a  commission 
with  jurisdiction  over  practices  in  this  behalf  extending  to  the 
fields  of  general  trade. 

Policy  Outlined. — The  need  of  the  country  for  new  means  of 
adjusting  this  old  difficulty  is  clearly  and  forcibly  expressed  in 
the  following  language : 

"And  the  business  men  of  the  country  desire  something 
more  than  that  the  menace  of  legal  process  in  these  matters 
be  made  explicit  and  intelligible.  They  desire  the  advice, 
the  definite  guidance  and  information  which  can  be  sup- 
plied by  an  administrative  body,  an  interstate  trade  com- 
mission. 

"The  opinion  of  the  country  would  immediately  ap- 
prove of  such  a  commission.  It  would  not  wish  to  see  it 
empowered  to  make  terms  with  monopoly  or  in  any  sort  to 
assume  control  of  business,  as  if  the  Government  made 
itself  responsible.  It  demands  such  a  commission  only  as 
an  indispensable  instrument  of  information  and  publicity, 
as  a  clearing  house  for  the  facts  by  which  both  the  public 
and  the  managers  of  great  business  undertakings  should 
be  guided,  and  as  an  instrumentality  for  doing  justice  to 
business  where  the  processes  of  the  courts  or  the  natural 
forces  of  correction  outside  the  courts  are  inadequate  to 
adjust  the  remedy  to  the  wrong  in  a  way  that  will  meet  all 
equities  and  circumstances  of  the  case." 

President  Commends  Legislation. — That  he  felt  the  responsi- 
bility of  a  correct  solution  of  this  momentous  question,  goes  with- 

5  See  Summary  of  Debate  contained  in  Appendix  M,  pages  3O4-334*  post. 


8  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

out  saying.  In  a  public  statement6  made  some  months  subsequent 
to  the  enactment  of  the  Federal  Trade  Commission  Act  and  the 
Clayton  Law,  President  Wilson  said : 

"Enterprise  has  been  checked  in  this  country  for  almost 
twenty  years  because  men  were  moving  among  a  maze  of 
interrogation  points.  They  did  not  know  what  was  going 
to  happen  them.  *  *  *  It  was  a  very  great  burden,  let  me 
say,  to  fall  upon  a  particular  adminstration  of  this  Govern- 
ment to  have  to  undertake  practically  the  whole  business 
of  final  definition.  *  *  *  I  feel  that  the  mists  and  mias- 
matic airs  of  suspicion  that  have  filled  the  world  have  now 
been  blown  away  *  *  *" 

Problems  Involved  in  Solution  of  Difficulty. — What  were  the 
problems  to  which  were  attached  the  "interrogation  points"  men- 
tioned in  the  President's  address,  is  succinctly  set  forth  in  a  list 
of  eleven  forms  of  "unfair  competition"  compiled  by  William  S. 
Stevens,  of  Columbia  University,  and  quoted  in  the  debates  upon 
the  then  pending  Federal  Trade  Commission  Act  and  Clayton 
Law: 

1.  Local  price  cutting. 

2.  Operation  of  bogus  "independent"  concerns. 

3.  Maintenance  of  "fighting  ships"  and  "fighting  brands." 

4.  Lease,  sale,  purchase,  or  use  of  certain  articles  as  a  condition 

of  the  lease,  sale,  purchase,  or  use  of  other  required  ar- 
ticles. 

5.  Exclusive  sales  and  purchase  arrangements. 

6.  Rebates  and  preferential  contracts. 

7.  Acquisition  of  exclusive  or  dominant  control  of  machinery  or 

goods  used  in  the  manufacturing  process. 

8.  Manipulation. 

9    Blacklists,  boycotts,  white  lists,  etc. 
10.  Espionage  and  use  of  detectives, 
u.  Coercion,  threats  and  intimidation.7 

Reference  to  the  text  of  these  corrective  statutes,  (Appendices 
A  and  B,  pages  246-278,  post,)  will  indicate  the  sincere  efforts 
which  Congress  at  the  request  of  the  President  and  with  the  co- 

6  Address  before  the  Conference  of  the  American  Electric  Railway 
Association,  April,  1915. 

7  Cited  in  The  Nation's  Business,  Washington,  D.  C.,  July  15,  1914. 


NATURE  AND  LIMITATIONS  OF  COMPETITION.  9 

operation  of  the  leaders  in  our  world  of  business,  has  devoted  to 
the  solution  of  these  questions  and  the  removal  of  the  "interroga- 
tion points"  which  have  checked  and  bewildered  the  initiating 
force  of  the  country  "for  almost  twenty  years." 

Unfairness  in  Trading  Has  Myriad  Forms. — It  has  from  the 
first  been  realized  no  specific  inhibitions  against  eleven  or  any 
number  of  unfair  practices  would  or  could  prevent  unfair  dealers 
from  finding  new  means  to  oppress  their  competitors,  if  they  were 
so  inclined.  It  was  the  intention  of  Congress  to  make  the  legis- 
lation so  broad  as  to  meet  new  devices  or  conditions  as  they  arise, 
and  to  that  end  the  words  "unfair  methods  of  competition  in 
commerce"  which  contained  the  essential  prohibitory  feature  of 
the  several  statutes  were  purposely  left  undefined  as  to  their 
scope  and  meaning.  In  this  manner  the  laws  remain  elastic,  viz : 
like  "fraud,"  the  definition  can  be  so  extended  as  to  meet  every 
form  which  human  cunning  or  the  desire  to  over-reach  can  as- 
sume. 

10.  VIEWS  OF  LEADING  AUTHORITIES  QUOTED. 

Views  of  Qualified  Spokesmen  Cited. — How  complete  has  been 
the  success  of  this  supplemental  legislation  is  a  question  which  time 
alone  can  answer.  It  may,  however,  be  at  once  instructive  and 
encouraging  to  recite  the  views  of  others  who,  like  President  Wil- 
son and  former-President  Taft,  have  shown  a  vital  interest  in 
solving  the  problems  which  long  have  interfered  with  the  prosper- 
ity of  the  nation.  It  must  be  expected  that  some  immediate  hard- 
ships and  losses  will  occur  during  the  period  of  transition  from  an 
established  though  faulty  system  of  protecting  public  interests,  to  a 
correct  if  necessarily  somewhat  imperfect  and  experimental  one, — 
and  under  such  circumstances  the  promise  of  compensating  ad- 
vantages will  come  with  welcome  and  heartening  effect. 

At  a  date  slightly  posterior  to  the  President's  Message  to  Con- 
gress, a  gathering  of  distinguished  men  from  various  states  and 
of  differing  political  and  business  affiliations  occurred  at  the  City 
of  Washington  for  the  express  purpose  of  discussing  the  various 
phases  of  the  projected  interstate  trade  commission.8 

8  Second  Annual  Meeting  of  the  Chamber  of  Commerce  of  the  U.  S.  A., 
held  February  12,  1014.  References  in  later  notes  are  to  the  reprint  of 
speeches,  issued  by  the  association. 


io  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

Opinion  of  Secretary  of  Commerce. — Secretary  of  Commerce 
Redfield9  dwelt  upon  the  high  mortality  existing  among  promotions 
which  have  for  their  object  the  control  and  exploitation  of  any 
particular  line  of  trade.  He  affirmed  that  "the  number  of  these 
gigantic  organizations  that  have  been  conspicuously  successful  is 
not  very  large,  nothing  like  half  of  those  that  have  come  into  ex- 
istence. *  *  *  It  would  be  perfectly  easy  to  take  up  line 
after  line  in  which  ten  or  fifteen  years  ago  a  trust  dominated  the 
whole  situation  and  show  that  the  independent  concerns,  starting 
since,  or  running  independently  at  the  time,  have  come  to  be, 
and  are  now,  the  more  profitable."  This  result,  he  declared,  was 
due  to  "a  law  which  operates  inexorably,  beyond  which  you  can- 
not press  the  production  without  increasing  the  cost  of  every  unit 
of  that  product."  In  that  law  he  saw  an  opposing  force  which 
would  regulate  those  great  organizations  "to  prevent  their  acquir- 
ing the  dominant  power  which  some  fear." 

Remarks  by  President  of  University  of  Wisconsin. — Charles 
R.  Van  Hise,10  president  of  the  University  of  Wisconsin,  affirmed 
that  competition,  when  unrestricted,  had  failed  to  maintain  quality 
or  reduce  prices.  The  waste  of  competitive  effort  was  excessive. 
"Co-operation  for  all  classes  of  business  *  *  *  so  far  as  not 
inimical  to  the  general  welfare,"  under  the  supervision  of  an  ap- 
propriate commission, — was  the  condition  which  the  public  interest 
and  commerce  itself  demanded.  He  concluded:  "I  confidently 
look  forward  to  a  new  era  of  social  responsibility  on  the  part  of 
both  the  well-to-do  and  the  poor,  to  a  time  when  reason  and  science 
rather  than  vested  interest  or  passion,  shall  control  economic 
legislation." 

As  Seen  from  the  Legal  View  Point. — Victor  Morawetz11 
law  writer  and  economist,  dwelt  upon  the  definite  meaning 
which  the  Sherman  Law  had  derived  from  the  Standard  Oil  and 
Tobacco  decisions  of  the  Supreme  Court.  He  deprecated,  how- 
ever, hasty  or  vindictive  legislation  to  extend  or  supplement  the 
anti-trust  laws.  "To  hamper  honest  and  legitimate  enterprise 
merely  to  strike  at  those  who  break  the  law,  or  benefit  themselves 
by  illegitimate  means,  would  not  be  enlightened  and  wise  legisla- 
tion. *  *  *  Undoubtedly,  some  legislation  supplementary  to 

9  Id.,  page  2. 

10  Id.,  page  8. 

11  Id.,  page  26. 


NATURE  AND  LIMITATIONS  OF  COMPETITION.  n 

the  Anti-trust  Act  is  desirable.  The  creation  of  a  trade  com- 
mission consisting  of  experienced  and  able  men  would  be  a  wise 
step.  It  would  be  a  step  forward." 

Opinion  by  Representative  of  Important  Business  Interests. 
— Frederick  P.  Fish,12  former  president  of  the  Amerian  Tele- 
phone and  Telegraph  Company,  asserted  that — "Great  business 
enterprises  feel  as  never  before  the  force  of  public  sentiment  and 
they  are  now  in  a  chastened  frame  of  mind  which  leads  them  to 
respect  the  universal  demand  that  they  should  not  deal  harshly  or 
unreasonably  in  their  competition  with  those  who  are  less  strong 
than  they."  And,  at  an  earlier  place  he  said — "If  the  principles 
of  the  Sherman  Law  are  valid  some  way  must  be  found  by  which 
small  concerns  as  well  as  large  may  be  restrained  from  unfair 
competition  or  our  whole  industrial  fabric  may  be  shaken."  His 
conclusion  consisted  in  suggesting  a  preliminary  commission  which 
shall  study  the  whole  anti-trust  field  and  recommend  to  Congress 
such  supplemental  legislation  as  will  regulate  all  business  compe- 
tition, without  endangering  vested  rights  and  interests. 

Remarks  and  Suggestions  by  an  Experienced  Manufacturer. 
— Henry  R.  Towne,13  engineer  and  manufacturer,  after  a  review 
of  the  existing  and  proposed  anti-trust  laws,  discussed  the  pro- 
posed Interstate  Trade  Commission,  and  declared — "A  new  tri- 
bunal of  this  kind  is  unquestionably  desirable,  and  its  ultimate 
usefulness  should  equal  that  of  the  Interstate  Commerce  Commis- 
sion. Business  needs  it  and  if  it  is  properly  constituted  will  wel- 
come it.  *  *  *  The  Tariff  and  Currency  questions  are  dis- 
posed of.  The  creation  of  an  Interstate  Trade  Commission,  and 
the  enactment  of  a  clear  and  simple  law  defining  its  powers  and 
duties  will  complete  the  triad  by  disposing  of  the  anti-trust  prob- 
lem *  *  *. 

Opinion  by  Another  Representative  of  Manufacturing  In- 
terests.— Guy  E.  Tripp,14  chairman  of  the  Board  of  Directors, 
Westinghouse  Electric  and  Manufacturing  Company,  analyzed 
the  proposed  legislation,  and  in  the  course  of  his  remarks,  said : 
"But  I  believe  that  our  political  institutions  and  the  temper  of  our 
people  [in  contradistinction  to  those  of  foreign  countries,  particu- 
larly Germany]  are  not  adapted  to  monopolistic  methods  that  are 


12  Id.,  page  35. 

13  Id.,  page  56. 

14  Id.,  page  61. 


12  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

in  restraint  of  trade,  and  that  fair  competition  in  business  will 
make  a  more  contented  public,  a  more  secure  government,  and  in 
the  end  give  greater  protection  to  property.  *  *  *  To  my 
mind  free  competition  is  not  sane  competition. 

"The  biggest  business  in  the  country  was  founded  almost  entire- 
ly upon  the  principle  of  free  competition,  namely  that  of  making 
prices  what  and  when  you  will  and  of  taking  all  the  business 
from  your  competitor  that  you  can.  *  *  *  A  Trade  Com- 
mission seems  to  me  to  be  needed  in  a  well  rounded  plan  of  busi- 
ness legislation." 

Criticisms  and  Suggestions  by  Professor  Seager. — Henry  R. 
Seager,15  professor  of  Political  Economy,  Columbia  University, 
in  treating  of  the  proposed  trust  legislation,  said:  "The  feature 
of  the  proposed  trust  legislation  which  I  have  been  asked  to  make 
the  starting  point  of  my  comments  is  the  Interstate  Trade  Com- 
mission. In  urging  the  creation  of  such  a  commission,  President 
Wilson  is  certainly  voicing  the  mature  judgment  of  students  of 
the  trust  problem.  *  *  *  The  Newlands'  bill  to  create  an 
Interstate  Trade  Commission  has  received  more  prolonged  and 
careful  attention  than  any  of  the  other  three  [supplemental  Anti- 
trust] measures  now  before  Congress.  *  *  *  The  creation  of 
such  a  commission  means  inevitably  an  extension  of  government 
by  commission.  I  am  in  favor  of  it  because  I  believe  that  with 
the  growing  complexity  of  business  relations,  it  is  only  through 
the  guidance  of  commissions  of  experts  that  we  can  hope  to 
keep  these  relations  straight  and  to  advance  sound  business  policy. 
*  *  *  We  all  agree  that  unfair  methods  of  competition  which 
enable  big  corporations  to  wrest  markets  from  their  smaller  rivals, 
not  because  they  can  produce  more  economically  or  make  a  profit 
while  selling  more  cheaply  but  through  the  sheer  force  of  their 
larger  resources  and  the  wider  range  of  their  operations,  must  be 
stopped."  While  affirming  his  belief  in  competition  as  "a  domi- 
nant force  in  business,"  Professor  Seager  advocates  the  adoption 
of  the  principle  that  there  is  a  higher  method  than  the  individual- 
ism which  is  the  prevailing  factor  in  competitive  endeavors.  He 
adds  these  words  of  caution :  "But  let  us  not  make  a  fetish  of  com- 
petition. It  also  has  its  bad  as  well  as  its  good  side.  While  recog- 
nizing its  value  and  making  strenuous  efforts  to  insure  it  a  fair 
field  for  its  operation,  let  us  not  ignore  the  fact  that  co-operation 

15  Id.,  page  67. 


NATURE  AND  LIMITATIONS  OF  COMPETITION.  13 

also  has  its  legitimate  place.  On  a  higher  moral  plane  than  com- 
petition, its  extension,  under  conditions  that  compel  adequate  re- 
gard to  the  public  interest,  must  prove  advantageous  not  only  to 
business  men  but  to  the  whole  community." 

The  Legal  View  Point, — from  Another  Angle. — Louis  D. 
Brandeis,18  lawyer,  in  treating  of  the  pending  legislation  supple- 
mental to  the  anti-trust  laws,  commented  upon  the  general  situ- 
ation, as  follows :  "The  program  of  President  Wilson  is  not  a  pro- 
gram of  free  and  unrestricted  competition,  but  it  is  a  program  of 
regulating  competition  instead  of  regulating  monopoly."  *  *  * 
I  look  forward  to  the  trade  commission  which  we  are  about  to 
establish  as  an  instrument  which  will  be  of  inestimable  advantage 
to  the  business  and  the  future  of  America  by  making  the  common 
property  and  the  common  knowledge  of  American  business  men 
the  best  that  has  been  done  and  is  being  done  in  every  department  of 
business  throughout  the  world." 

ii.  REMARKS  ON  FIELD  FOR  COMMISSION. 

General  Conclusions  in  Aid  of  Subject. — In  concluding  these 
comments  by  experienced  and  keen  observers  of  our  country's 
affairs  and  interests,  it  may  be  permitted  to  add  that  cheapness  in 
price  is  not  the  sole  criterion  by  which  to  estimate  the  success 
that  competition  achieves.  The  prosperity  of  the  average  producer 
and  merchant  means  prosperity  in  which  all  can  and  will  share; 
and  a  reasonably  enhanced  price  is  a  small  consideration  to  pay 
for  a  condition  which  affords  the  customer  the  means  to  provide 
for  his  needs  more  readily  than  he  could  do  if  monopolies  produced 
goods  at  prices  which  mean  stagnation  in  all  businesses  except 
their  own.  For,  in  the  words  of  Lincoln, — "Cheapness  is  an  in- 
sult to  the  person  without  the  means  to  buy." 

A  commission  which  is  ushered  into  being  amid  the  favorable 
greetings  and  commendations  of  the  business  world  has  an  in- 
centive and  advantage  which  is  incalculable  at  the  inception  of  its 
career.  The  field  is  wide  and  the  mission  plain.  It  is  proper  and 
necessary  for  the  public  to  afford  the  Federal  Trade  Commission 
that  loyal  support  which  is  at  once  the  inspiration  and  the  means 
of  success  in  a  democracy. 

In  the  words  of  an  able  writer  and  recognized  authority  in  an- 

16  Id.,  page  75. 


14  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

other  sphere  of  recent  legislation:    "Practical  faith  and  mutual 
confidence  is  what  we  need."11 


17  F.  A.  Vanderlip,  president  of  The  National  City  Bank  of  New  York, 
—"Intellectual  Freedom  in  Currency  Legislation,"  page  4  (1913). 


CHAPTER  II. 

MONOPOLIES  AND  COMBINATIONS  TO  PREVENT 
COMPETITION. 

1.  Definition. 

2.  Development  of  Anti-trust  Sentiment. 

3.  Distinction  Between  Exclusive  Rights  and  Monopolies. 

4.  Public  Interests  Protected. 

5.  Constitutionality  of  New  Legislation  Seems  Assured. 

x.  DEFINITION. 

1.  A  Monopoly  Defined. — The  meaning  of  the  word  "monop- 
oly" has  been  expressed  as  the  sole  power  (or  a  power  largely  in 
excess  of  that  possessed  by  others)  of  dealing  in  some  particular 
commodity,  or  at  some  particular  market  or  place,  or  of  carrying 
on  some  particular  business.1 

2.  DEVELOPMENT  OF  ANTI-TRUST  SENTIMENT. 

Evolution  of  Anti-Monopoly  Idea. — The  granting  of  monop- 
olies is  a  very  ancient  right,  which  is  still  exercised  by  govern- 
ing bodies,  though  the  practice  is  generally  condemned  when 
undertaken  by  individual  initiative. 

Thus,  the  state,  by  the  patent  franchise,  accords  sole  rights  to 
make,  sell  and  use  patented  discoveries  and  inventions.  Under 
the  police  powers  of  the  state  the  marketing  of  liquor,  tobacco, 
conducting  of  slaughter  houses,  and  numerous  other  forms  of 
human  activity  are  confined  by  statute  within  certain  prescribed 
limits,  in  the  interest  of  the  public  welfare  and  health. 

Banking,  insurance  and  dealing  in  tickets  are  other  instances 
of  lines  of  business  which  are  confined  to  certain  persons  or 
classes;  and  there  are  forms  of  semi-public  institutions  such  as 
railroads,  telephone  and  telegraph  companies,  which  require  vast 
aggregations  of  capital  and  are  often  classified  as  quasi-monop- 
olies. 

The  existing  condition  which  is  familiar  to  every  one  has  not 
crystallized  into  the  shape  we  see  about  us  without  a  history  at 
once  interesting  and  of  service  in  enlightening  us  as  to  the  sub- 
ject in  hand. 

i  U.  S.  v.  American  Naval  Stores  Co.,  172  Fed.  455. 

15 


1 6  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

It  was  from  the  practice  of  the  English  sovereigns  in  granting 
to  favorites,  or  as  a  stimulant  to  good  service,  monopolies  in  the 
manufacture  or  sale  of  commodities,  that  the  present  manner  of 
protecting  inventions  arose. 

So  common  did  this  practice  become  in  the  time  of  the  Tudors, 
that  it  led  to  many  protests  on  the  part  of  Parliament,  as  will  be 
seen  by  reference  to  the  history  of  Queen  Elizabeth.  Such  an 
early  authority  as  Sir  Edward  Coke,  however,  laid  it  down  that 
while  by  the  ancient  common  law  the  king,  in  aid  of  inventors, 
could  grant  a  temporary  monopoly  covering  the  manufacture  or 
importation  of  an  invention,  it  was  illegal  to  make  grants  in  re- 
straint of  trade 

The  first  recorded  case,  decided  in  1602,  holds  the  same  way ; 
and  while  in  practice  the  rule  was  frequently  evaded,  the  decision 
was  never  overruled.2 

Under  the  Stuarts,  these  abuses  were  not  likely  to  grow  less 
in  number  nor  to  become  less  burdensome  to  the  people ;  and  in 
fact  the  owners  of  monopolies — known  generally  as  "purveyors" 
— grew  so  rapacious  as  to  have  a  considerable  influence  in  bring- 
ing about  the  death  of  Charles  I  and  the  flight  of  his  son  James. 

In  response  to  a  widespread  demand,  the  Statute  of  Monopolies 
was  enacted  by  Parliament  in  1623.  This  law  was  sweeping  in 
its  condemnation  of  the  evil  of  favoritism  in  trade,  and  being 
rigidly  enforced,  had  lasting  effects;  indeed,  it  is  not  too  much 
to  say  that  it  created  the  rule  that  still  prevails  prohibiting  re- 
straint of  trade. 

In  that  basic  enactment  there  appeared  two  exceptions,  viz : 
That  Parliament  might  grant  legal  monopolies,  and  that  the  Sov- 
ereign might  exercise  its  ancient  right  for  the  encouragement  of 
new  manufacturers  or  inventions.3 

On  these  exceptions  are  built  up :  First,  the  modern  system  of 
legislative  grants  of  exclusive  rights  to  trade  in  certain  com- 
modities, and  second,  the  system  of  letters-patent  for  inventions. 

3.  DISTINCTION  BETWEEN  EXCLUSIVE  RIGHTS  AND 
MONOPOLIES. 

Terms  "Monopolies"  and  "Exclusive  Rights"  not  Ident- 

2  Darcy  v.  Allen,  II  Coke  84;    Noy.  173;    Moore  673;    8  Coke  125. 
Consult  able  discussion  of  principles  contained  in  7  Harvard  Law  Re- 
view, page  342.    See  article,  "Monopoly,"  in  Encyc.  Brit.,  nth  Ed. 

3  See  Price's  Eng.  Patents  of  Monopoly.  1006. 


MONOPOLIES  AND  COMBINATIONS.  17 

ical. — Obscurity  and  much  confusion  have  occurred  as  the  re- 
sult of  an  indiscriminate  use  of  the  terms  "monopoly"  and  "ex- 
clusive rights,"  regarding  the  privileges  conferred  by  law  upon 
patentees  and  holders  of  copyrights.  It  need  hardly  be  said 
that  the  second  term  is  that  which  correctly  expresses  the  ac- 
tual condition. 

Inventors  and  authors  are  granted  exclusive  rights  to  control 
their  creations  for  limited  periods  of  time  in  return  for  and  as 
an  inducement  to  the  disclosure  of  such  creations  and  the  dissem- 
ination of  useful  information,  to  the  end  that  the  public  may 
have  the  free  enjoyment  thereof  upon  the  expiration  of  such 
exclusive  grants.4 

This  is  something  entirely  different  from  the  self-made  monop- 
olies and  restraints  of  trade  against  which  the  Anti-trust  statutes 
are  directed.  Monopoly  is  an  abuse  which  for  the  most  part  has 
grown  out  of  the  unregulated  condition  of  competition  in  com- 
merce and  trade;  the  exclusive  rights  of  the  inventor  and  author 
are  temporary  privileges  which  the  state  confers  in  return  for 
permanent  contributions  to  the  advancement  of  the  education 
and  general  welfare  of  the  public. 

The  distinction  between  predatory  interests — "trusts" — which 
the  public  in  its  own  protection,  seeks  to  keep  within  bounds,  and 
originators  of  useful  inventions  and  ideas  whom  the  public  honors 
and  encourages  by  grants  of  limited  privileges  and  rights,  is  so 
plain  as  to  be  apparent  to  all.  In  view,  however,  of  the  confusion 
of  terms  mentioned  above,  the  distinction  is  one  which  has  an  im- 
portant bearing  when  considering  the  subject  in  hand. 

Test  of  Fitness  not  a  Monopoly. — Courts  have  exercised  their 
judicial  powers  in  defining  and  limiting  the  power  of  the  state, 
to  give  exclusive  rights  in  trade  or  in  various  callings.  Thus, 
doctors,5  druggists,6  pilots7  and  plumbers,8  have  all  been  held  sub- 
ject to  the  so-called  police  power  of  the  state ;  and  the  rule  has 

4  For  discussion  of  principle  involved  and  for  measure  of  protection 
court  will  afford  such  exclusive  rights, — see  Henry  v.  A.  B.  Dick  Co.,  224 
U.  S.  i. 

5  State  v.  Wilcox,  64  Kansas  789;  68  Pac.  634. 

6  Com.  v.  Zacharias,  181  Pa.  St.  126;  affirming  5  Pa.  Dist.  475. 

7  Olsen  v.  Smith,  195  U.  S.  332 ;  25  Sup.  Ct.  52,  49  L.  Ed.  224. 

8  See  People  v.  City  Prison  Warden,  144  N.  Y.  529 ;  30  N.  E.  686,  27 
L.  R.  A.  718. 

2 


i8  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

been  often  upheld  that  those  who  practice  skilled  employments 
must  demonstrate  their  fitness  to  engage  in  those  occupations.9 

A  Strict  Construction  is  Applied  to  Chartered  Rights. — All 
franchises  are  strictly  construed,  and  since  all  monopolies  are  re- 
garded as  in  derogation  of  common  rights,  they  will  be  scrutinized 
with  care,  for  there  is  a  presumption  against  the  extension  of 
such  rights.10 

Franchise  Ripens  into  Contract. — It  is  also  a  well-known  rule 
that  when  a  franchise  is  once  accepted  and  acted  upon,  it  ripens 
into  a  contract,  which  the  state  has  no  right  to  impair  by  revoca- 
tion.11 An  exception,  of  course,  exists  in  those  cases  where  the 
public  safety  or  health  is  involved  ;12  and  it  is  now  quite  general 
for  the  state  to  expressly  stipulate  that  it  does  not  part  with,  but 
on  the  contrary  continues  to  retain  the  right  to  revoke  the  char- 
ter or  franchise,  for  causes  which  seem  sufficient  to  the  granting 
body.13 

Obnoxious  Monopoly  Effectuates  Public  Injury. — But  the 
type  of  monopoly  which  has  greatly  concerned  the  law-makers  of 
most  civilized  states  during  recent  years  has  not  to  do  with  any 
special  privilege  or  grant  from  the  government;  the  exclusive 
condition  has  been  acquired  by  combinations  between  manufac- 
turer or  merchants  or  both,  often  aided  by  artificial  manipulation 
of  the  volume  of  imports  from  foreign  markets.  And  here  as  in 
most  other  cases  where  an  offence  is  made  criminal  by  statute, 

9  This  principle  is  demonstrated  in  State  v.  Wilcox,  supra. 

10  Charles  River  Bridge  v.  Warren  River  Bridge,  u  Pet.  420,  g  L.  Ed. 
773,  938 ;  Bartholomew  v.  Austin,  85  Fed.  359,  29  C.  C.  A.  568. 

u  Dartmouth  College  v.  Woodward,  4  Wheat.  (U.  S.)  518,  4  L.  Ed.  629. 
See  also,  New  Orleans  Gas  Light  Co.  v.  Louisiana  Light,  Etc.,  Co.,  115 
U.  S.  650,  6  Sup.  Ct.  252,  29  L.  Ed.  516;  Walla  Walla  v.  Walla  Walla 
Water  Co.,  192  U  S.  I,  19  Sup.  Ct.  77,  43  L.  Ed.  341 ;  Louisville  Gas  Co. 
v.  Citizens'  Gas  Light  Co.,  115  U.  S.  683,  6  Sup.  Ct.  265,  29  L.  Ed.  510 
(reversing  81  Ky.  263).  All  the  cases  except  the  first  relate  to  franchises 
by  their  terms  exclusive. 

12  New  Orleans  Butchers'  Union  Slaughter  House,  Etc.,  Co.  v.  Crescent 
City  Livestock  Landing,  Etc.,  Co.,  in  U.  S.  749,  4  Sup.  Ct.  265,  28  L.  Ed. 

585. 

13  New  Orleans  v.  Hoyle,  23  La.  Ann.  740;   Gorrell  v.  Town  of  New- 
port, Tenn.  Ch.  App.  120.     See  also  Corporation  Laws  and  Constitutions 
of  the  several  States,  where  it  is  now  universal  to  reserve  the  power  to 
revoke  charters. 


MONOPOLIES  AND  COMBINATIONS.  19 

the  intent  rather  than  the  result  is  the  controlling  element,  when 
the  person  charged  is  put  upon  his  trial.1* 

Restraint  of  Trade  Impairs  or  Destroys  Commerce. — The 
injury  to  the  public  is  as  disastrous  in  its  results  upon  trade,  as  if 
the  monopoly  had  been  created  by  some  favoring  legislation ;  but 
the  growth  of  monopoly  by  combination  is  frequently  so  slow  and 
insidious  that  individual  trade  is  dead  before  the  people  under- 
stand the  nature  and  extent  of  the  fatal  influence. 

4.  PUBLIC  INTERESTS  PROTECTED. 

Laws  Usually  Adequate,  when  Enforced. — In  most  cases,  the 
law  is  adequate,  when  it  is  taken  up  energetically  and  especially, 
where  the  public  authorities  set  the  criminal  law  in  motion.  To 
bring  a  given  case  within  the  prohibited  class,  some  degree  of 
substantial  monopolization  is  necessary;  though  it  is  not  essen- 
tial that  the  monopoly  should  be  complete,  or  nearly  so.  Some 
control  of  the  market  is  all  that  is  called  for  to  bring  about  such 
an  infraction.  And  this  principle  extends  to  every  variety  of 
article  that  is  a  public  necessity.  Thus,  machinery  and  tools, 
metals  and  stone,  fuel,  illuminating  oils,  drugs,  together  with 
ordinary  provisions  and  household  supplies, — have  each  been 
held  to  be  the  objects  of  monopolies,  at  various  times;  and  such 
restrictions  upon  trade  have  been  declared  against  public  policy, 
though  where  latitude  was  left  for  actual  competition,  reasonable 
agreements  have  been  tolerated  by  the  courts.15 

14  Reasonableness  or  unreasonableness  of  the  extent  of  restraint  which 
is  imposed  upon  commerce  is  not  material,  where  intent  or  ability  to  create 
monopoly  is  made  to  appear.    U.  S.  v.  Trans-Missouri  Freight  Assoc.,  166 
U.  S.  290,  17  Sup.  Ct.  540,  41  L.  Ed.  1007 ;  Chesapeake  &  Ohio  Fuel  Co.  v. 
U.  S.  115  Fed.  610,  623.     For  argument  opposed  to  above  doctrine,  see 
Over  v.  Byram  Foundry  Co.,  77  N.  E.  302  (Ind.  App.,  1906).    The  Stand- 
ard Oil  (221  U.  S.  i)  and  American  Tobacco  (221  U.  S.  66)  cases  indi- 
cate an  application  of  the  common  law  "rule  of  reason"  when  judicially 
passing  upon  each  situation.     Probably  the  forthcoming  decision  by  the 
Supreme  Court  in  the  pending  appeal  in  the  Harvester  Case   (214  Fed. 
987)  will  have  an  important  bearing  here.    For  this  rule  in  its  application 
to  right  of  a  patentee  to  take  his  profit  in  whole  or  in  part  by  requiring 
certain  specified  material  to  be  employed  in  connection  with  the  use  of  his 
protected  device, — see  Henry  v.  A.  B.  Dick  Co.,  224  U.  S.  I ;   explained  in 
Bauer  et  cie.,  229  U.  S.  I.     For  discussion  of  principles  involved, — see 
Standard  Sanitary  M'f'g  Co.  Case,  191  Fed.  172,  (4  Fed.  Anti-trust  Dec. 
395),  affirmed  226  U   S.  20.    For  basic  grounds  on  which  monopolies  are 
illegalized,  compare  generally  early  decision,  Darcy  v.  Allen,  page  16,  supra. 

15  Cooke's  "Combinations,  Monopolies,"  etc.,  sections  13,  14;   "Monop- 
olies," 27  Cyc.,  pages  899,  900,  etc. 


20  MANUAL  otf  FEDERAL  TRADE  COMMISSION. 

Rate  Fixing  Falls  within  General  Prohibition. — Generally 
speaking,  all  combinations  between  traders  or  manufacturers  in- 
tended to  suppress  competition  between  themselves  fall  within 
the  same  class  of  prohibited  agreements. 

Rate-fixing  by  insurance  companies  or  their  agents  when  it 
tends  to  suppress  competition,  has  been  held  to  suffer  from  the 
same  taint.16 

Banks  and  Common  Carriers  under  Separate  Jurisdictions. 
— Combinations  calculated  to  create  monopolies,  when  under- 
taken on  the  part  of  transportation  companies  or  by  banks,  are  in 
general  exempted  from  the  operation  of  proceedings  instituted 
under  either  the  Federal  Trade  Commission  Act  or  the  Clayton 
Law,  and  they  will  not  be  considered  here. 

Contracts  against  Public  Policy  Usually  not  Enforcible. — 
The  rule  seems  to  be  that  members  of  an  agreement  against  pub- 
lic policy  cannot  successfully  prosecute  actions  between  them- 
selves, where  the  object  sought  is  to  enforce  such  a  contract,17 
and  this  rule  extends  to  affording  a  non-member  a  complete  de- 
fence, when  sued  to  compel  compliance  therewith.18 

The  rule,  however,  must  be  understood  to  apply  only  to  mat- 
ters directly  connected  with  contracts  in  restraint  of  trade,  col- 
lateral or  independent  matters  being  subject  to  the  usual  rights  of 
enforcement  which  pertain  to  contracts  generally.10 

Equity  courts  will  not  enforce  such  restraining  contracts  by 
specific  performance,  but  are  somewhat  more  lenient  in  respect 
to  compelling  payment  for  goods  or  services,  where  there  is 

16  In  re  Insurance  Policies,  7  Pa.  St.  17;    Beechley  v.  Mulville,  102 
Iowa  602 ;   Queen  Ins.  Co.  v.  The  State,  86  Texas  253,  266.    Combinations 
to  fix  rates,  etc.,  may  be  prohibited  by  State  laws,  without  violating  pro- 
visions of  Fourteenth  Amendment  of  Federal  Constitution.     Carroll  v. 
Greenwich  Ins.  Co.,  199  U.  S.  401 ;  Joyce  on  Monopolies,  §  236. 

17  Gibbs  v.  Consolidated  Gas  Co.,  130  U.  S.  396,  9  Sup.  Ct.  553,  32  L.  Ed. 
979;   McCutcheon  v.  Merz  Capsule  Co.,  71  Fed.  787,  19  C.  C.  A.  108,  31 
L.  R.  A.  415. 

•    18  Pacific  Factor  Co.  v.  Adler,  90  Cal.  no,  27  Pac.  36,  25  Am.  St.  102; 
McCutcheon  v.  Merz  Capsule  Co.,  supra. 

19  Chicago  Wall  Paper  Mills  Co.  v.  General  Paper  Co.,  147  Fed.  491. 
This  principle  does  not  apply,  however,  in  jurisdictions  where  such  de- 
fences are  permitted  by  explicit  statutory  provisions.  National  Lead  Co. 
v.  Grote  Paint  Store  Co.,  80  Mo.  App.  247 ;  Pasteur  Vaccine  Co.  v.  Burkey, 
22  Tex.  Civ.  App.  232,  54  S.  W.  804. 


MONOPOLIES  AND  COMBINATIONS.  21 

no  mandatory  statute  making  membership  in  a  combination  in 
restraint  of  trade  a  complete  defence.20 

New  Anti-trust  Laws  may  Establish  New  Rulings. — These 
last  mentioned  rules  can,  at  first,  be  only  an  uncertain  guide  in 
actions  under  the  Federal  Trade  Commission  Act,  or  the  Clayton 
Law,  since  the  Commission  will  of  necessity  create  its  own  rulings 
as  to  the  extent  to  which  it  will  recognize  or  enforce  contracts  of 
the  prohibited  monopolies;  but  nevertheless  these  rules  and  the 
decisions  associated  therewith  constitute  the  only  existing  guides 
upon  the  subject  in  hand,  and  they  are  presented  by  way  of  sug- 
gestion, until  this  new  legislation  shall  be  construed  and  its  limita- 
tions officially  defined. 

5.  CONSTITUTIONALITY  OF  NEW  LEGISLATION  SEEMS 
ASSURED. 

Test  of  Constitutionality  Stated. — Anti-trust  statutes  which 
are  not  retrospective  in  their  operation,  and  which  do  not  dis- 
criminate in  their  application,  have  been  usually  upheld,  where 
their  constitutionality  has  been  the  subject  of  attack.21 

The  so-called  police  power  of  the  state  is  so  broad  in  its  scope 
and  so  drastic  in  its  compelling  force  that  Congress  can  go  very 
far  in  combating  anything  approaching  the  character  of  a  monop- 
oly, without  exceeding  the  recognized  functions  of  legislation.22 

Federal  Regulation  Limited  to  Interstate  Trading. — It  need 
not  be  said,  however,  that  the  power  of  Congress  is  limited  to 
interstate  trading  and  business.  By  the  nature  of  these  statutes 
questions  which  arise  from  transactions  carried  on  within  the 
confines  of  a  single  state  are  relegated  to  the  local  courts  ;23  and 
those  questions  will  not  be  considered  here. 

20  The  rule  does  not  extend  to  permitting  defendant  to  interpose  the 
defense  of  monopoly  or  restraint  of  trade,  when  sued  for  an  infringement 
of  patent  rights.    General  Electric  Co.  v.  Wise,  119  Fed.  922;   Columbian 
Wire  Co.  v.  Freeman  Wire  Co.,  71  Fed.  302;    American  Soda  Fountain 
Co.  v.  Green,  69  Fed.  333;    National  Harrow  Co.  v.  Quick,  67  Fed.  130; 
Strait  v.  National  Harrow   Co.,  51   Fed.  819.     See   distinction  between 
patentee's  rights  and  those  of  owner  of  copyright,  in  this  particular,  noted 
in  Chapter  XV,  pages  185-205,  post. 

21  Addystone  Pipe  and  Steel  Co.  v.  U.  S.,  175  U.  S.  211,  20  Sup.  Ct. 
96,  44  L.  Ed.  136,  affirming  85  Fed.  171. 

22  Northern  Securities  Co.  v.  U.  S.,  193  U.  S.  197,  48  L.  Ed.  679,  24  Sup. 
Ct.  436. 

23  Addystone  Pipe  and  Steel  Co.  v.  U.  S.,  175  U.  S.  211.    Note  portion 
of  decision  modifying  the  judgment  of  the  Circuit  Court  of  Appeals  on  the 
ground  that  the  latter  decree  undertakes  to  regulate  other  than  interstate 
trade  and  commerce. 


CHAPTER  III. 

FEDERAL  TRADE  COMMISSION'S  FUNCTIONS: 

1.  As  a  Board  of  Inquiry. 

2.  As  a  Judicial  Body. 

General  Comment. — The  main  functions  of  the  Federal  Trade 
Commission  are  fundamentally  distinct.  In  the  one  instance  it 
sits  as  a  Board  of  Inquiry,  institutes  and  prosecutes  investiga- 
tions, compiles  data  and  reports,  either  at  its  own  instance  or  at 
the  request  of  Congress  or  the  President-  In  the  other  capacity, 
it  hears  testimony  and  issues  orders  granting  relief,  which  orders 
are  reviewable  and  may  be  enforced  by  the  Federal  Courts. 

The  combination  of  powers  so  dissimilar,  and  each  so  far-reach- 
ing, creates  a  department  which  is  unique  in  Federal  legislation. 
The  originality  of  the  Congressional  conception  of  what  this 
body  should  be  indicates  that  the  abuses  thereby  sought  to  be 
curbed  or  destroyed  were  such  as  usual  remedies  failed  to  over- 
come. That  this  is  so,  the  history  of  Anti-trust  legislation  and  of 
the  resultant  litigation  would  seem  to  show.  Rules  were  adopted 
which  the  trusts  often  ignored  and  found  means  to  circumvent 
through  technical  points  of  law.  This  condition,  as  appears  in 
Chap.  VIII,  Sherman  Anti-trust  Law,  pp.  70-95,  at  length  became 
intolerable.  The  small  manufacturer  or  merchant  existed  only  by 
sufferance,  and  the  business  world  was  strewn  with  the  wreckage 
of  battles  in  which  the  resources  and  acumen  of  the  trusts  destroyed 
the  independent  competitor  with  monotonous  regularity.  To  end 
this  superiority  of  combined  wealth,  and  to  restore  the  equilibrium 
of  competition  operating  in  accordance  with  law,  Congress  en- 
acted various  restrictive  laws  ending  with  the  Federal  Trade 
Commission  Act  and  the  Clayton  Law,  which  are  in  effect  a  code 
of  business  ethics,  fortified  with  provisions  for  carrying  those 
rules  into  effect.  Furthermore,  since  the  full-grown  trust  has  dis- 
played a  rampant  energy  and  pugnacity  which  statute-laws 
seemed  helpless  to  meet  and  overcome,  Congress  has  sought  to  pur- 
sue a  preventive  course  by  prohibiting  "unfair  methods  of  compe- 
tition in  commerce"  with  the  intention  of  guarding  legitimate 
business  against  piratical  and  unfair  methods  of  illegitimate 
combinations  and  powerful  unprincipled  competitors  fraudulent 

22 


FUNCTIONS  OF  FEDERAL  TRADE  COMMISSION.  23 

practices  generally,  and  thereby  to  preserve  so  far  as  possible 
equal  opportunity  and  a  fair  chance  for  all. 

This  explanation  is  necessary  before  entering  upon  a  descrip- 
tion of  the  functions  of  the  Commission  itself.  The  functions 
must  be  viewed  in  connection  with  the  situation  they  were  in- 
tended to  meet ;  otherwise  the  machinery  created  for  that  purpose 
cannot  be  appreciated  or  understood.  If  the  purpose  of  these 
statutes  is  kept  clearly  in  mind,  numerous  difficulties  or  uncertain- 
ties will  disappear  and  the  task  of  understanding  their  provisions 
will  be  greatly  diminished. 

i.  THE  COMMISSION'S  FUNCTIONS  AS  A  BOARD  OF 
INQUIRY. 

Inquisitorial  Powers  Enumerated. — By  Section  6  of  the  Fed- 
eral Trade  Commission  Act  general  power  is  vested  in  that  Board 
to  gather,  compile  and  distribute  information.  With  this  object 
in  view  the  Commission  is  given  power  in  eight  particulars, — 
probably  confined,  however,  to  matters  connected  with  enforcing 
the  Anti-trust  laws : 

(a)  To  inquire  into  the  organization,  business,  conduct,  prac- 
tice and  management  of  any  corporation  engaged  in  commerce 
excepting  banks  and  common  carriers  and  the  relation  of  such 
corporation  to  other  corporations  and  to  individuals,  associations 
and  partnerships. 

(b)  To  require  annual  or  special  reports,  covering  the  lines  of 
inquiry  named  in  the  paragraph  (a). 

(c)  Upon  its  own  initiative  or  upon  the  request  of  Attorney- 
General,  it  shall  be  privileged  to  inquire  into  and  report  upon  the 
effectiveness  of  any  final  decree  in  any  suit  brought  by  the  United 
States  to  prevent  and  restrain  any  violation  of  the  Anti-trust  acts. 

(d)  Upon  the  direction  of  the  President  or  either  House  of 
Congress  to  investigate  and  report  the  facts  relating  to  any  al- 
leged violations  of  the  Anti-trust  acts  by  any  corporation. 

(e)  Upon  the  application  of  the  Attorney-General,  and  with 
the  obvious  and  laudable  purpose  of  preventing  litigation,  the 
Commission  is  authorized  to  investigate  and  make  recommenda- 
tions for  the  readjustment  of  the  business  of  any  corporation  al- 
leged to  be  violating  the  Anti-trust  laws. 

(f)  In  the  interest  of  the  public  the  board  is  authorized  and 
empowered  in  its  discretion  to  publish  the  records  of  its  investiga- 


24  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

tions,  not  including  trade  secrets  and  names  of  customers,  and  to 
publish  its  decisions ;  also  to  make  annual  and  special  reports  to 
Congress,  with  recommendations  for  additional  legislation. 

(g)  From  time  to  time,  to  classify  corporations  and  make  rules 
and  regulations  for  the  purpose  of  carrying  on  the  provisions  of 
the  act.  Much  discussion  took  place  in  the  Congressional  commit- 
tees concerning  the  futility  of  compelling  reports  unless  the  Com- 
mission had  previously  fixed  a  standard  of  computation,  so 
that  the  information  thus  collected  and  filed  would  be  in  a 
form  convenient  for  reference,  and  by  comparison  of  the  re- 
ports definite  results  could  be  secured.  The  right  to  classify 
and  to  make  suitable  rules,  etc.,  should  obviate  that  difficulty. 
Doubtless,  among  the  approximately  300,000  corporations  amen- 
able to  the  Federal  Trade  Commission,  a  large  percentage  will  not 
afford  anything  of  interest  to  the  Commission,  and  will  be  ex- 
cused altogether  from  the  burden  of  making  reports.  Special 
reports  can  be  demanded  whenever  occasion  requires. 

(h)  Investigations  are  authorized  into  matter  connected  with 
the  foreign  trade  of  the  United  States  and  the  Commission  is  em- 
powered to  report  to  Congress  thereon,  with  recommendations. 
Hearings  have  been  held  at  commercial  centres,  looking  to  such  a 
report  at  the  ensuing  session  of  Congress. 

Public  Hearings  Optional  with  Commission. — No  specific 
provision  of  the  Federal  Trade  Commission  law  requires  it  to  hold 
public  hearings  or  to  make  public  its  proceedings  or  the  resultant 
information,  except  at  its  own  volition.  The  Interstate  Commerce 
Commission  holds  public  sessions  in  some  though  not  all  of  its 
investigations;  the  Bureau  of  Corporations  has  conducted  all  its 
hearings  in  private  and  it  seems  entirely  optional  with  the  Federal 
Trade  Commission  to  adopt  either  course,  as  it  deems  fit.  Prob- 
ably those  investigations  it  holds  under  its  strictly  inquisitorial 
powers  will  not  be  conducted  publicly,  and  only  the  results  will 
be  published  in  annual  or  special  reports.  Where  corporations 
neglect  to  file  required  reports,  or  fail  to  impart  information  duly 
called  for,  penalties  are  imposed  by  this  act. 

a.  THE  FEDERAL  TRADE  COMMISSION  AS  A  JUDICIAL 
BODY. 

Complaints  Filed  only  When  Violations  Shown. — In  the 
exercise  of  this  function,  the  Commission  is  empowered  to  hold 
hearings  as  to  particular  acts  and  to  enter  orders  in  accord- 


FUNCTIONS  OF  FEDERAL  TRADE  COMMISSION.  25 

ance  with  the  facts  disclosed  (Federal  Trade  Commission  Act, 
Section  5). 

Complaints  may  be  filed  only  by  the  Commission  itself  when  it 
has  reason  to  believe  the  law  has  been  violated.  This  statutory 
interdiction  against  natural  persons  or  corporations  instituting 
proceedings,  in  effect  simplifies  the  practice.  When  a  complaint 
appears  to  the  Commission  to  be  without  merit,  filing  thereof  can 
be  refused.  Probably,  in  the  event  of  a  mistake,  mandatory 
proceedings  would  lie  in  the  United  States  District  Court  to 
compel  acceptance  of  such  a  complaint.1 

The  absence  of  any  absolute  right  by  a  party  to  file  a  complaint 
applies  to  both  the  Federal  Trade  Commission  Act  and  to  the 
Clayton  Law  (compare  Clayton  Law,  Section  u).  It  is  hardly 
conceivable  that  such  omission  should  be  without  some  definite 
purpose  or  plan.  Probably  refusal  to  file  a  complaint  will  amount 
in  Commission  practice  to  the  dismissal  of  a  pleading  in  ordinary 
courts  of  law  or  equity. 

Complaints  under  Section  5  of  the  Trade  Commission  Act  have 
an  element  which  distinguishes  them  from  complaints  under  Sec- 
tions 2,  3,  7  and  8  of  the  Clayton  Law.  In  the  former  proceed- 
ings, the  element  of  "public  interest"  must  be  present,  whereas 
under  the  Clayton  Law  the  disputes  of  private  individuals  are  the 
matters  required  to  be  adjudicated.  This  important  and  far- 
reaching  distinction  gives  to  proceedings  under  Section  5  of  the 
Commission  Act  something  of  the  nature  and  scope  of  state-insti- 
tuted prosecutions  under  the  provisions  of  Section  4  of  the  Sher- 
man Law. 

The  whole  purport  and  scope  of  the  Federal  Trade  Commis- 
sion Act  lends  itself  readily  to  such  an  interpretation  of  the  lan- 
guage of  the  statute.  It  is  fitting  and  natural  that  the  law  which 
provides  the  means  of  making  effective  the  Anti-trust  laws  in  so 
far  as  they  effect  general  business  concerns,  should  in  the  same 
statute  designate  a  class  of  acts  and  type  of  behavior  that  the 
Commission  can  take  cognizance  of  only  when  the  public  interests 
are  concerned.  This  rule  in  practice  will  emphasize  such  com- 
plaints, for  the  interest  of  the  public  therein  will  constitute  them 
state  trials  in  numerous  instances;  and  the  Attorney-General 

i  To  this  effect,  see  Interstate  Commerce  Commission  v.  Humboldt 
Steamship  Co.,  224  U.  S.  484. 


26  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

may  no  doubt  intervene  to  protect  the  rights  of  the  community  at 
large. 

Provisions  Analyzed  and  Compared. — The  authorizing  words 
of  the  statutes  conferring  power  upon  this  Commission  to  hold 
hearings  under  the  Federal  Trade  Commission  Act,  Section  5, 
and  the  Clayton  Law,  Section  u,  are  generally  the  same,  except 
that  the  Commission  under  the  former  law  is  empowered  to  pro- 
ceed only  when  "it  shall  appear  to  the  Commission  that  a  proceed- 
ing by  it  in  respect  thereof  would  be  to  the  interest  of  the  public." 
This  grant  of  power  is  in  substance  similar  to  that  which  the  orig- 
inal Act  to  Regulate  Commerce  (Sections  12,  13)  confers  upon 
the  Interstate  Commerce  Commission  in  respect  to  its  rights  to 
hold  hearings  and  enter  orders.  While  we  find  in  the  Act  to  Reg- 
ulate Commerce,  Section  13,  a  provision  that  "no  complaint  shall 
at  any  time  be  dismissed  because  of  the  absence  of  direct  damage 
to  the  complainant,"  and  while  there  is  no  positive  direction  to 
that  effect  in  either  of  the  statutes  regulating  the  power  and  pro- 
cedure of  the  Federal  Trade  Commission,  it  is  probable  that  the 
legal  result  is  the  same.2 

Under  the  last-named  statutes  it  becomes  the  duty  of  the  Fed- 
eral Trade  Commission  to  issue  a  restraining  order  if  it  shall  be 
the  opinion  of  the  Commission  that  the  prohibitions  contained  in 
those  laws  "have  been  or  are  being  violated."  No  mention  is 
made  or  anywhere  suggested  that  proof  of  "direct  damage  to  the 
complainant"  is  made  the  test  of  ability  to  successfully  carry  the 
proceeding  to  conclusion.  It  appears  to  be  assumed  that  while 
such  an  element  might  be  pertinent  to  the  case,  it  is  not  an  essen- 
tial feature  in  the  proceeding. 

The  legal  questions  presented  by  the  grant  of  power  to  hold 
hearings  and  enter  orders  persuant  to  the  provisions  of  the  Fed- 
eral Trade  Commission  Act  and  the  Clayton  Law  will  in  due 
course  be  definitely  set  at  rest  by  judicial  construction. 

From  the  wording  of  both  these  laws  it  seems  very  plain  that 
Congress  neither  attempted  nor  intended  tc  institute  a  new  branch 
of  the  legislative  department  of  government ;  rather,  the  purport 
and  natural  inference  and  construction  is  that  the  Commission  has 
been  given  power  to  act  as  a  judicial  body.  In  furtherance  and 

2  For  purposes  of  comparison  of  powers,  see  Statute — Interstate  Com- 
merce Act  (Act  to  Regulate  Commerce,  approved  February  4,  1887),  con- 
tained in  Appendix  O,  pages  345,  361. 


FUNCTIONS  OF  FEDERAL  TRADE  COMMISSION.  27 

corroboration  of  this  idea,  attention  is  called  to  the  fact  that  the 
Commission  may  be  asked  to  act  in  conjunction  with  a  court  of 
equity,  and  as  a  master  in  chancery  frame  an  appropriate  form  of 
decree  in  actions  brought  by  the  Attorney-General  under  the  Anti- 
trust laws  (Trade  Commission  Act,  Sec.  7). 


CHAPTER  IV. 

PROHIBITIONS  UNDER  THE  CLAYTON  LAW. 

1.  Unfair  price  discrimination. 

2.  Conditional  or  "tying"  contracts. 

3.  Ownership  by  one  Corporation  in  the  stock  of  another. 

4.  Interlocking  Directorates. 

a.  Corporations  generally. 

b.  Provisions  as  to  banks-. 

c.  Provisions  as  to  common  carriers. 

i.  UNFAIR  PRICE  DISCRIMINATION. 

Terms  Originally  More  Severe. — This  provision  (section  2) 
was  originally  much  more  drastic,  and  as  it  came  from  the  House, 
its  terms  made  all  price  discrimination  unlawful.  The  condi- 
tions which  mitigate  the  statutes'  severity  were  added  by  the 
Senate  and  in  its  present  form  no  harm  can  be  done  to  any  per- 
son or  corporation  with  honest  intention  to  deal  fairly.1  Indeed, 
this  provision  is  more  lenient  than  its  prototype,  Laws  of  New 
Jersey,  Chap.  15,  Session  1913,  where  no  allowance  is  made  for 
the  "cost  of  selling,"  or  for  "discrimination  in  price  in  the  same 
or  different  communities  made  in  good  faith  to  meet  compeiition," 
nor  are  the  merchants  to  select  their  customers.  There  is  no 
mystery  about  the  nature,  extent  or  reality  of  the  "unfair  meth- 
ods" which  is  aimed  at  by  Congress  in  this  enactment.  The  rec- 
ord of  the  testimony  and  proceedings  leading  up  to  the  decrees  of 
dissolution  of  the  Standard  Oil  Company  and  The  American  To- 
bacco Company  show  clearly  how  the  practice  of  the  trusts  when 
so  disposed,  have  worn  down  and  crushed  their  competitors.  Cor- 
porations, covertly  controlled,  were  specially  organized  to  cut 
prices  in  one  community,  while  the  price  was  maintained  or  even 

I  In  the  initial  Clayton  Bill  decision,  Great  Atlantic  &  Pacific  Tea  Co. 
v.  Cream  of  Wheat  Co.,  224  Fed.  566,  (So.  Dist.  of  N.  Y.,  July  20,  1915),  it 
was  held  that  the  basic  right  to  select  customers  recognized  and  incorpo- 
rated in  the  provisions  of  Section  2  permits  the  defendant  to  refuse  to  sell 
to  plaintiff. 

In  arriving  at  the  general  result  adverse  to  plaintiff,  the  District  Court 
relies  upon  the  reasoning  and  citations  contained  in  Fisher  Flouring  Mills 
Co.  v.  Swanson,  76  Wash.  649.  Decision  affirmed,  November  9,  1915. 

This  Clayton  Law  decision  is  also  referred  to  herein  at  pages  193,  194- 

28 


PROHIBITIONS  UNDER  CLAYTON  LAW.  29 

raised  elsewhere;  retailers  were  penalized  if  competitors'  goods 
were  displayed ;  and  numerous  other  devices  resorted  to  in  order 
to  monopolize  the  business.  Perhaps  the  extreme  is  shown  in  the 
record  of  the  methods  alleged  to  have  been  employed  by  a  certain 
manufacturing  concern,  where  it  is  charged  that  agents  were  em- 
ployed to  disarrange  or  mutilate  the  machines  of  competing  con- 
cerns, in  order  to  enhance  the  superiority  claimed  for  those  manu- 
factured by  the  first-named  concern. 

Statute  Ample  for  Purpose. — The  latitude  in  trade  permitted 
by  the  statute  should  be  ample  for  those  concerns  intending  to 
deal  fairly ;  and  as  to  the  others,  the  severity  of  the  law  will  be 
well  employed  in  restraining  or  extinguishing  their  activities. 
The  statute  is  well  drawn  to  accomplish  its  purpose.  No  legiti- 
mate enterprise  can  suffer  by  compliance  with  its  terms.  The 
law  has  served  due  notice  upon  the  predatory  class  in  business, 
and  it  becomes  the  duty  of  the  Federal  Trade  Commission  to  en- 
force the  statutory  requirements.  Section  u  vests  in  the  Inter- 
state Commerce  Commission  or  the  Federal  Reserve  Board  the 
right  to  enforce  Sections  2,  3,  7,  and  8  where  applicable  respec- 
tively to  common  carriers  or  banking  institutions.  Section  16  fur- 
ther restricts  to  the  United  States  government  the  right  to  apply 
for  injunctive  relief  against  railroads,  in  certain  cases.  Since 
neither  banks  nor  railroads  are  dealers  in  commodities,  it  is  prob- 
able Congress  did  not  intend  to  include  banks  or  transportation 
concerns  within  the  scope  of  Section  2.2 

2.  CONDITIONAL  OR  "TYING"  CONTRACTS. 

A  Common  Form  of  Oppression. — This  practice  has  been 
common  on  the  part  of  largfe  concerns  which  have  sought 
to  introduce  with  their  selling  contracts  a  clause  so  "tying"  up 
their  customer  that  dealing  with  competitors  was  rendered  almost 
or  quite  impossible.  By  Section  3  of  the  Clayton  Bill,  such  prac- 
tice is  made  unlawful,  and  the  insertion  of  a  "tying"  condition  is 
prohibited  in  interstate  commerce,  whether  the  articles  are  pat- 
ented or  unpatented,  and  whether  delivery  is  made  by  sale  or 
lease.  The  lawfulness  is  made  to  turn  upon  whether  the  effect 
of  the  transaction  is  substantially  to  lessen  competition,  or  wheth- 
er it  tends  to  create  a  monopoly.  Thus  the  question  of  fact  will 
be  the  turning  point  in  every  instance,  and  contracts  regulating 

2  See  Butler  &  Lynde's  Federal  Trade  Commission,  pages  9  and  10. 


3O  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

dealings  having  a  legitimate  and  fair  purpose  are  not  likely  to  be 
disturbed.  In  its  practical  effect  this  clause  will  probably  be  con- 
strued to  permit  the  patent  owner  to  require  specified  material  to 
be  used  in  connection  with  his  patent  machine  or  process,  as  was 
recently  permitted  under  then  existing  laws  in  Henry  v.  H.  B. 
Dick  Co.,  224  U.  S.  i ;  but  it  is  equally  probable  he  will  not  be  per- 
mitted to  compel  the  licensee  to  employ  such  material  generally, 
regardless  of  its  use  in  association  with  the  patented  invention. 

The  former  right  would  seem  to  be  in  accordance  with  the 
patentee's  right  to  exercise  or  transfer  the  privilege  of  "exclu- 
sive use"  which  letters  patent  confer ;  while  the  extension  of  that 
right  by  compelling  the  licensee  to  agree  to  employ  such  material 
generally  would  appear  "to  substantially  lessen  competition  or 
tend  to  create  a  monopoly  in  any  line  of  commerce," — to  consti- 
tute such  a  "tying"  contract,  in  brief,  as  Section  3  was  intended 
to  prohibit  in  connection  with  patented  or  unpatented  articles. 

It  may  be  that  the  Commission  and  the  courts  will  construe 
the  statute  so  broadly  that  the  practice  of  selling  patented  devices 
under  "tying"  contracts  will  be  authorized  where  the  general  vol- 
ume of  the  material  "tied"  to  the  use  of  the  patented  machinery 
is  not  so  controlled  as  to  create  a  universal  restraint  and  monopoly 
in  that  general  line  of  trade,  for  every  reasonable  latitude  should 
be  afforded  the  inventor  to  reap  the  full  benefits  of  his  discovery ; 
but  the  apparent  intention  of  the  legislation  is  to  restrict  the  "ex- 
clusive right"  which  a  patent  confers,  to  those  things  directly  as- 
sociated with  the  protected  invention  itself. 

Object  is  Plain. — Comment  seems  uncalled  for  as  the  object  of 
the  statute  is  plain  and  speaks  for  itself.  By  the  provisions  of 
Section  n,  exclusive  jurisdiction  is  conferred  upon  the  Interstate 
Commerce  Commission  and  the  Federal  Reserve  Board  to  en- 
force the  prohibitions  contained  in  Sections  2,  3,  7  and  8,  where 
applicable  to  common  carriers  or  banking  institutions,  respec- 
tively. Probably  the  instances  where  "tying"  sales  or  leases  will 
occur  in  connection  with  the  two  last-named  classes  of  corpora- 
tions will  be  extremely  few ;  but  the  intent  of  Congress  was  clear- 
ly to  interdict  them,  wherever  and  whenever  their  presence,  joined 
to  a  monopolistic  intent,  is  made  to  appear. 


PROHIBITIONS  UNDER  CLAYTON  LAW.  31 

3.  OWNERSHIP  OF  ONE  CORPORATION  OF  STOCK  IN 
ANOTHER,  WHERE  THE  EFFECT  MAY  BE  TO  RESTRAIN 
COMMERCE  OR  MAY  TEND  TO  CREATE  A  MONOPOLY. 

Provision  Aimed  at  Abuse  of  Stock  Control. — This  prohibi- 
tion (Sec.  7)  is  not  directed  against  natural  persons  but  relates 
to  corporations  only.  It  covers  competing  corporations  actually 
engaged  in  commerce  and  also  holding  companies,  whose  sole 
function  is  to  own  and  operate  other  incorporated  enterprises. 

Under  Section  n  the  Interstate  Commerce  Commission  or  the 
Federal  Reserve  Board  are  specifically  given  power  to  enforce  the 
provision  of  this  section  (7)  whenever  it  calls  for  determination 
of  the  affairs  of  a  common  carrier  or  bank.  Saving  clauses  are 
contained  in  the  text  which  permits  corporations  to  own  stocks  for 
investment,  to  form  subsidiary  corporations  for  non-monopolistic 
purposes,  and  which  exempt  stocks  theretofore  legally  acquired. 
Common  carriers  are  also  permitted  to  own  stocks  in  branch  line 
companies. 

Control  by  Holding  Company  Illegalized. — It  will  be  seen 
that  the  scope  and  purpose  of  the  statute  is  to  prohibit  an  abuse 
which  by  degrees  crept  into  the  laws  of  certain  jurisdictions,  com- 
monly known  as  "the  incorporating  States,"  and  resulted  in  an 
abuse  of  the  power  to  grant  chartered  rights.  A  competition  in 
the  enactment  of  corporation  laws  permitting  companies  to  "do 
anything  anywhere" — a  maximum  of  powers  with  a  minimum  of 
responsibility  and  supervision — brought  about  an  impossible  sit- 
uation. 

Under  the  theory  of  the  comity  of  States,  these  powers  were 
accorded  a  measure  of  recognition  even  in  jurisdictions  where 
locally  incorporated  companies  were  denied  similar  privileges, 
and  in  the  end  confusion  was  sure  to  ensue.  The  corporation 
tax  became  a  prize  for  the  least  conscientious  in  this  competition 
in  lax  lawmaking,  and  while  the  fees  of  the  Secretary  of  State 
became  an  Aladdin's  lamp  of  income  in  numbers  of  instances,  in 
one  jurisdiction  the  salaries  of  the  state  officers  and  the  judiciary 
were  reputed  to  be  met  from  that  item  alone. 

Where  the  revenues  from  the  trusts  and  large  incorporated  in- 
terests were  so  important  in  making  up  the  annual  budget,  small 
concerns  could  not  hope  for  equal  consideration;  and  thus  the 
scales  of  justice  became  suspected  of  being  in  a  condition  of  un- 
stable equilibrium.  An  aristocracy  of  wealth  arose,  which  was  an 


32  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

anomoly  and  contradiction  in  a  republic.  Fortunately,  the  federal 
court  perceived  the  logical  sequence  of  such  overgrown  powers 
vested  in  State-granted  charters,  and  the  Gordian  knot  was  cut 
when  those  powers  were  refused  recognition  and  enforcement  in 
the  Northern  Securities  case.3  Since  that  time  the  decline  and  fall 
of  the  "holding  company,"  as  a  vehicle  for  carrying  out  trust- 
control,  has  been  rapid  and  sure.  Probably,  the  death-knell  of 
that  peculiar  institution  of  vested  rights  in  monopoly  and  busi- 
ness oppression  has  been  sounded  by  the  enactment  of  the  Clay- 
ton Bill.  It  is,  in  fact,  a  declaration  of  the  independence  of  the 
concern  of  moderate  size  from  the  domination  of  its  overgrown 
rival.  Even  in  the  States  where  the  larger  portion  of  the  tax 
burden  was  borne  by  favored  interests  "for  a  consideration," 
the  return  to  free  and  fair  conditions  and  active  competition  will 
be  welcomed,  when  the  present  generation  of  business  men  have 
noted  the  freer  and  wider  opportunities  which  the  provisions  of 
the  Anti-trust  laws  afford.  Perhaps  it  will  be  wise  to  again  call 
attention  to  the  fact  that  this  provision  concerns  only  corporations. 
Nothing  therein  contained  prevents  the  ownership  of  stock  of 
competing  corporations  by  firms  or  individuals. 

4.  INTERLOCKING  DIRECTORATES.* 

In  General. — This  provision  is  a  new  development  in  anti-trust 
legislation.  It  is  probably  an  outgrowth  of  the  congressional  in- 
vestigation into  the  banking  situation,  instituted  as  an  inquisition 
preparatory  to  the  enactment  of  law  creating  the  Federal  Reserve 
Bank.  The  subject  is  treated  under  several  divisions,  and  as  our 
particular  concern  lies  with  business  corporations,  we  will  first 
take  up  for  consideration : 

a.  Prohibition  of  Directorship  in  Competing  Companies. 

Undue  Influence  Gained  by  Official  Connections. — Section  8 
of  the  Clayton  Law  renders  it  unlawful  to  hold  the  office  of  di- 
rector in  two  or  more  competing  corporations,  where  one  of  these 

3  U.  S.  v.  Northern  Securities  Co.,  193  U.  S.  197. 

4  The  debates  in  the  62nd  Congress  (for  substance  thereof,  see  Appen- 
dix M,  pages  304,  334)  which  led  up  to  the  enactment  of  the  Clayton  Law 
plainly  indicate  that  this  and  the  three  preceding  inhibitions  were  intended 
to  go  to  the  root  of  "unfair  methods  of  competition  in  commerce,"  and  to 
overcome  these  practices  by  attacking  them  at  such  an  early  stage  that  they 
should  not  have  the  opportunity  to  become  strong  and  formidable. 


PROHIBITIONS  UNDER  CLAYTON  LAW.  33 

has  assets  of  more  than  $1,000,000,  including  capital,  surplus  and 
undivided  profits.  The  evil  sought  to  be  cured  is  the  practice  of 
manifold  directorships  held  by  capitalists  in  concerns  which  on 
the  surface  are  active  competitors.  As  a  matter  of  fact,  the  in- 
side information  and  the  friendly  intercourse  leads  to  a  practical 
monopoly  and  kills  all  real  competition  in  business.  It  also  makes 
the  allied  interests  act  as  a  unit  against  any  new  enterprises  that 
enter  into  their  particular  field.  The  "unfair  methods  of  competi- 
tion in  commerce"  prohibited  by  Section  5  of  the  Federal  Trade 
Commission  Act  no  doubt  frequently  have  their  inception  in  the 
personal  dealings  and  private  conclaves  so  natural  in  the  confiden- 
tial conferences  of  the  meetings  of  the  various  boards  of  director- 
ates; and  of  this  fact  and  this  human  tendency  Congress  has 
taken  notice,  as  shown  in  this  prohibition  of  plural  directorships. 
The  assets  computed  as  stated  above  exclude  dividends  declared 
but  not  paid  at  the  end  of  the  fiscal  year  next  preceding  the  elec- 
tion of  directors,  and  a  director  lawfully  elected  may  continue  to 
hold  office  for  his  annual  term.  This  provision  in  general  seems 
well  calculated  to  remove,  or  at  least  to  obstruct  one  source  of 
monopolistic  control;  and  later  statutory  amendments  can 
strengthen  the  inhibition,  should  its  avoidance  in  practice  nullify 
the  good  intent  of  the  law. 

b.  Interlocking  Directorates  of  Banking  Institutions. 

Holding  Plural  Positions  in  Banks  Regulated. — The  provi- 
sions of  Section  8  in  so  far  as  they  relate  to  banks  extend  to  of- 
ficers and  employes,  as  well  as  to  directors.  In  that  respect  they 
differ  from  the  corresponding  regulations  governing  the  manage- 
ment of  common  carriers  and  of  corporations  engaged  in  general 
business  transactions.  While  the  general  scheme  of  this  portion 
of  Section  8  is  so  plain  as  to  be  obvious,  the  wording  is  unfortu- 
nate, and  results  in  ambiguities  and  difficulties  that  are  needless  in 
a  carefully  constructed  statute  such  as  this  should  be. 

Now  as  to  the  general  scheme, — this  is  certainly  to  render  un- 
lawful community  of  directorates,  in  whole  or  in  part,  in  banking 
institutions  with  large  resources.  As  a  measure  of  size,  Congress 
has  adopted  the  unit  of  $5,000,000  as  bringing  the  institution, 
whether  organized  under  federal  or  state  laws,  within  the  class 
where  a  person  must  be  satisfied  with  a  seat  at  one  directors' 
table.  In  computing  the  component  assets, — deposits,  capital,  sur- 
plus and  undivided  profits  are  taken  at  the  valuation  thereon 
3 


34  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

placed  in  the  annual  report  for  the  fiscal  year  next  preceding  the 
date  for  the  annual  election  of  directors.  The  prohibition  be- 
comes effective  two  years  from  the  date  of  the  approval  of  the 
Clayton  Law,  i.e., October  15, 1916, and  directors  lawfully  elected 
can  continue  to  hold  office  for  one  year,  notwithstanding  one  or 
more  of  the  institutions  have  grown  to  proportions  that  would 
otherwise  bring  them  within  the  prohibited  class.  This  much  of 
these  provisions  of  Section  8  is  plain  and  needs  no  interpreta- 
tion. 

Out  of  abundant  precaution  Congress  has  made  the  inhibition 
of  interlocking  bank  directorates  absolute  in  cities  of  more  than 
200,000  population,  as  computed  in  the  last  preceding  decennial 
census.  The  period  of  grace  which  defers  operation  two  years  is 
not  mentioned  in  this  paragraph ;  but  a  provision  excepts  one  in- 
stitution where  the  entire  capital  stock  is  owned  by  stockholders 
in  the  other  bank.  Mutual  savings  banks  not  having  a  capital 
stock  represented  by  shares  are  also  exempted  from  the  restric- 
tions of  this  portion  of  Section  8.  While  no  terms  appear  where- 
by it  is  expressly  stated  that  the  two  years'  limit  is  fixed  for  the 
going  into  effect  of  the  prohibition  relating  to  municipalities  of 
more  than  200,000  population,  still  the  general  intent  to  permit 
liberal  time  for  adjustment  to  the  circumstances  ensuing  from 
the  novel  environment  this  statute  creates,  seems  to  imply  that 
such  was  the  legislative  intent. 

Probable  Modification. — Furthermore,  it  seems  likely  that  pro- 
hibition against  occupying  a  duplicate  seat  as  director,  etc.,  in  cor- 
porations of  more  than  $5,000,000  of  assets  was  intended  to  be 
modified  by  the  provision  as  to  entire  stock  ownership.  The 
whole  attitude  of  the  law-making  power  seems  to  be  conciliatory, 
outside  the  limits  of  the  absolute  inhibitions ;  and  reasonable  in- 
ferences as  to  latitude  in  carrying  the  law  into  effect,  seems  to 
be  warranted.  In  fact,  the  Department  of  Justice  under  date  of 
November  24,  1914,  has  expressed  its  opinion  ( i )  that  a  director 
in  a  banking  institution  may  serve  in  a  national  bank  not  having 
common  ownership  of  stock,  until  the  expiration  of  two  years 
from  the  approval  of  the  Clayton  Law,  and  until  the  date  there- 
after when  the  annual  election  of  directors  is  held;  (2)  that  the 
right  to  the  office  of  director  in  two  institutions  whose  deposits, 
capital,  etc.,  exceed  $5,000,000,  exists  where  the  stock  of  one  is 
wholly  owned  by  the  stockholders  in  the  other;  (3)  that  the  pro- 


PROHIBITIONS  UNDER  CLAYTON  LAW.  35 

visions  of  Section  8  as  to  the  two-year  date  within  which  the  act 
shall  take  effect,  and  as  to  mutual  savings  banks,  common  stock 
ownership  and  Federal  Reserve  Banks  should  also  apply.  In 
other  words,  in  all  cities,  regardless  of  size,  directors  of  banks 
may  continue  to  sit  at  more  than  one  board,  until  the  period  end- 
ing October  15,  1916,  has  expired,  and  until  the  next  ensuing  an- 
nual election. 

As  has  been  already  explained,  the  Congressional  intent  must 
be  gathered  from  the  whole  section  construed  together,  and  rea- 
sonable latitude  as  to  time  and  method  of  application  is  implied ; 
so  that  the  statute  will  bear  and  should  be  given  a  liberal  interpre- 
tation, in  those  particulars  where  positive  prohibitions  are  not 
directly  involved. 

c.  Provisions  of  Section  8,  Regulating  Interlocking  Directorates 
of  Common  Carriers. 

Exemption  Covers  Only  Railroads. — By  an  express  exemption 
common  carriers  subject  to  the  Act  to  Regulate  Commerce,  ap- 
proved February  4,  1887,  are  relieved  from  the  restrictions  con- 
tained in  Section  8  of  the  Clayton  Law ;  but  this  exception  is  con- 
fined to  railroads  only.  The  statute  thus  referred  to  and  made 
controlling  here,  is  the  original  act  to  regulate  commerce,  and  no 
common  carriers  excepting  railroads  are  included  within  the  scope 
of  that  act.  Hence,  it  is  evident  that  no  person  can  be  at  the 
same  time  a  director  in  two  corporations,  including  common  car- 
riers other  than  railroads,  if  elimination  of  competition  by  agree- 
ment betw-een  them  would  amount  to  a  violation  of  any  of  the 
anti-trust  laws. 

Mr.  Clayton,  in  the  Report  of  the  Judiciary  Committee  of  the 
House,  (printed  in  Senate  Report  No.  698,  page  48)  says  on  this 
point  that  "calamities  of  fire  and  flood"  may  make  it  sometimes 
necessary  for  a  railroad  to  secure  additional  funds  in  the  most 
expeditious  and  convenient  quarter,  and  that  accordingly  railroads 
should  be  left  free  to  have  banking  interests  represented  upon 
their  boards.  No  doubt  it  was  also  felt  that  the  Interstate  Com- 
merce Commission  had  power  and  authority  to  deal  with  any 
abuse  of  this  privilege,  if  such  should  occur. 

Where  common  carriers  are  specified  at  other  places  in  the 
Clayton  Law,  different  language  is  employed  so  that  the  above  de- 
duction and  inference  seems  abundantly  supported  in  the  text  of 
the  section  itself.  Thus  at  Section  7,  paragraph  4,  we  find  the 


36  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

words :  "any  common  carrier  subject  to  the  laws  to  regulate  com- 
merce;" Section  9,  paragraph  i,  "Every  *  *  *  corporation 
engaged  in  commerce  as  a  common  carrier;"  Section  10,  para- 
graph i,  "common  carrier  engaged  in  commerce,"  which  leads  to 
the  general  conclusion  that  all  common  carriers,  excepting  rail- 
roads, fall  within  the  class  of  corporations  where  interlocking  di- 
rectorates are  prohibited. 

If  this  construction  of  the  statute  is  correct,  then  pipe  line,  ex- 
press, sleeping  car,  telegraph  and  telephone  companies  are  sub- 
ject to  the  prohibition  and  are  forbidden  to  have  interlocking  di- 
rectors. Probably  virtual  control  could  be  achieved,  however, 
where  subsidiary  corporations  that  do  not  "substantially  lessen 
competition"  are  concerned,  by  the  ownership  of  the  stock-control, 
permitted  "by  Section  7,  paragraph  3 ;  and  since  such  cases  would 
not  "constitute  a  violation  of  any  of  the  provisions  of  any  of  the 
anti-trust  laws,"  it  is  probable  that  no  charge  could  properly  be 
made  under  the  provisions  of  Section  8.  Reverting  again  to 
Section  7,  the  language  of  paragraph  2,  when  read  in  connection 
with  the  succeeding  paragraph,  would  appear  to  indicate  that  Con- 
gress intended  to  confer  upon  common  carriers  equal  rights  with 
other  corporations  in  the  matter  of  owning  stock  in  subsidiary 
companies  incorporated  to  carry  on  enterprises  not  otherwise  de- 
clared unlawful  by  the  anti-trust  laws, 


CHAPTER  V. 

PROVISIONS  FOR  ENFORCEMENT;  PARTICU- 
LARLY, PROCEDURE  UNDER  SECTION  5  OF 
THE  FEDERAL  TRADE  COMMISSION  ACT,  AND 
UNDER  SECTION  u  OF  THE  CLAYTON  LAW, 
TO  MAKE  EFFECTIVE  SECTIONS  2,  3,  7,  AND  8, 
OF  SAID  LAW. 

1.  Necessity  For  and  Means  of  Enforcement. 

2.  Statutes  Differ  in  Important  Particular. 

3.  Procedure  Before  Commission  Described. 

4.  Congress  Prescribed  Only  Limited  Review. 

5.  Commendatory  Rulings  Not  Part  of  Legislative  Plan. 

6.  Service  of  Process. 

x.  NECESSITY  FOR  AND  MEANS  OF  ENFORCEMENT. 

Necessity  for  Reform  Caused  Evolution  of  these  Laws. — 

The  abuse  of  freedom  in  conducting  corporate  enterprises,  and 
the  practice  of  creating  and  conducting  chartered  bodies  solely  to 
advance  some  trade-restraining  scheme,  are  subjects  that  have 
been  considered  by  Congress  for  many  years,  and  numerous 
corrective  laws  relating  thereto  have  been  added  to  the  statute 
books.  The  Federal  Trade  Commission  Act  and  the  Clayton 
Law  are  but  the  latest  in  this  series  of  Anti-trust  legislation. 
The  Commission  is  specially  authorized  to  report  to  Congress 
(Commission  Act,  section  6,  paragraph  f),  as  to  the  additional 
enactments  which  it  may  deem  advisable. 

Means  to  Enforce  Required. — But  laws  of  this  nature  in- 
tended to  combat  and  destroy  abuses  of  such  long  standing  and 
affecting  such  powerful  interests  are  not  self-acting,  and  adequate 
provisions  for  the  enforcement  of  their  mandatory  or  prohibitory 
features  must  be  carefully  prepared ;  otherwise,  the  laws  will  be 
ignored  or  disobeyed  with  impunity.  The  procedure  is  con- 
tained in  Section  5  of  the  Federal  Trade  Commission  Act  and 
Section  n  of  the  Clayton  Law.  In  terms  they  are  practically  iden- 
tical, except  that  the  Commission  is  only  authorized  by  the  first- 
named  law  to  file  a  complaint  when  "it  shall  appear  to  the  Com- 

37 


38  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

mission  that  a  proceeding  by  it  in  respect  thereof  would  be  to  the 
interest  of  the  public," — Section  5,  Federal  Trade  Commission 
Act.  Under  the  Clayton  Law,  instances  where  infraction  of  its 
provisions  shall  be  followed  by  proceedings,  civil  or  criminal,  are 
set  forth  specifically  and  in  detail ;  whereas  in  the  Federal  Trade 
Commission  Act  the  responsibility  for  exercising  a  wise  discre- 
tion devolves  squarely  upon  the  Commission  itself. 

2.  STATUTES  DIFFER  IN  IMPORTANT  PARTICULAR. 

A  Distinction  Noted. — Doubtlesss  there  is  a  reason  for  this 
peculiar  feature  of  the  statute  creating  the  Commission,  and  this 
reason  probably  consists  in  the  determination  by  Congress  that 
every  infraction  of  the  Clayton  Law  shall  be  considered  a  matter 
affecting  "the  public  interest" ;  whereas  violations  of  the  rules  es- 
tablished to  prevent  unfair  methods  of  competition  in  commerce 
might  often  appear  too  trivial  or  too  open  to  excuse  or  to  a  rea- 
sonable doubt  to  warrant  seriously  entertaining  the  belief  that 
such  a  proceeding  would  be  "to  the  interest  of  the  public."  Such 
seems  the  logical  inference  from  the  wording  of  these  statutes, — 
as  well  as  from  the  surrounding  circumstances  that  should  always 
be  studied  and  given  weight  when  seeking  to  arrive  at  the  legis- 
lative intent  which  is  the  essence  of  every  law. 

Means  of  Securing  Information  not  Specified. — On  one  point 
Section  5  of  the  Federal  Trade  Commission  Act  is  curiously  de- 
ficient. It  does  not  state  how  the  information  shall  be  obtained 
on  which  the  Commission  is  to  act  in  cases  where  the  "public  in- 
terest" is  concerned.  This  omission  was  no  doubt  due  to  inad- 
vertence on  the  part  of  the  lawmakers.  In  actual  practice,  those 
features  will,  no  doubt,  be  supplied  by  the  Rules  and  Regulations 
which  the  Commission  will  adopt.1  A  sworn  affidavit  or  declara- 
tion would  be  sufficient  to  inform  the  Commission  as  to  the  speci- 
fied violation  of  the  Federal  Trade  Commission  Act  or  Anti-trust 
laws,  and  this  paper  would  form  a  basis  on  which  the  conscience 
of  the  Commission  could  rest  the  charge  contained  in  the  formal 
complaint  which  Section  5  prescribes  for  the  commencement  of 
a  proceeding  where  the  "interest  of  the  public"  is  involved.  While 
the  opinion  of  the  Commission  is  left  by  statute  as  the  controlling 
element  in  deciding  the  question  of  recognizing  or  ignoring  the 
particular  charge  so  far  as  instituting  a  proceeding  thereon  is  con- 
cerned, the  party  who  feels  aggrieved  is  not  left  entirely  to  the 

.     i  See  Rules  of  Practice  before  the  Commission,  pages  232-235,  post. 


PROVISIONS  FOR  ENFORCEMENT.  39 

discretion  of  the  Commission  for  his  right  of  redress.  While  a 
controversy  and  matter  having  an  importance  entirely  personal  to 
the  parties  concerned  would  not  be  entitled  to  attention  under 
Section  5,  yet  there  would  be  a  "twilight  zone"  where  courts 
might  well  disagree  with  the  conclusion  of  the  Commission  and 
would  see  a  public  interest  in  having  the  particular  matter  heard 
and  decided  in  due  course.  In  brief,  there  must  be  exceptions  to 
the  rule  laid  down  in  Section  5;  and  some  outside  board  or 
tribunal  would  necessarily  have  to  act  as  the  court  of  review, 
when  such  exceptional  cases  were  shown  to  exist.  Such  a  useful 
provision  is  found  in  practice,  for  mandamus  proceedings  would 
lie  to  compel  the  Commission  to  assume  jurisdiction,  in  case  it 
arbitrarily  refused  to  take  cognizance  of  the  charge,  after  due 
compliance  with  the  formalities  required  by  the  rules.1* 

It  has  no  doubt  been  abundantly  shown  that  the  element  of  dis- 
cretion is  given  in  large  measure  under  the  Federal  Trade  Com- 
mission Law,  Section  5;  whereas  under  Section  n  of  the  Clay- 
ton Law  the  person  who  alleges  a  grievance  is  in  effect  the  moving 
party.  With  this  peculiar  feature  of  the  statute  disposed  of,  we 
shall  pass  on  to  consider  the  nature  of  the  proceeding  instituted 
under  Section  5  of  the  Federal  Trade  Commission  Act  and  Sec- 
tion ii  of  the  Clayton  Law. 

3.  PROCEDURE  BEFORE   COMMISSION  DESCRIBED. 

Method  of  Procedure  before  Commission. — A  proceeding 
of  this  nature  is  begun  by  the  service  of  a  complaint  which 
has  been  previously  issued  by  the  Commission  or  Board  according 
as  the  particular  case  relates  to  trade  or  common  carriers,  or 
banks.  The  complaint  shall  specify  a  date  of  hearing  not  less 
than  30  days  after  service  on  the  defendant.  Upon  the  return  day 
defendant  shall  be  entitled  to  appear  and  to  show  cause  why  an 
order  should  not  be  entered  by  the  Commission  or  Board  requir- 
ing such  corporation,  individual,  or  firm  to  cease  and  desist  from 
the  violation  of  the  law  so  charged  in  said  complaint.  Since  the 
powers  required  to  be  exercised  in  deciding  questions  of  this  na- 
ture are  essentially  judicial,  it  is  very  plain  that  the  statute  must 
intend  that  all  the  requirements  of  due  process  of  law  shall  be 
attended  to  in  full  measure  so  that  the  terms  of  the  Constitution 

la  Interstate  Commerce  Commission  v.  Humboldt  Steamship  Company, 
224  U.  S.  474,  484- 


4O  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

shall  not  be  impaired,  but  on  the  contrary,  the  parties  shall  have 
ample  opportunities  to  present  and  urge  their  arguments  and  sup- 
porting cases.  Express  provisions  in  Sections  5  and  n  permit 
persons  or  corporations  to  intervene,  upon  due  cause  shown.  In 
the  vast  majority  of  cases  the  persons  interested  in  the  issue  raised 
by  the  complaint  will  be  large.  The  result  should  be  a  thorough 
understanding  of  the  situation  and  of  the  respective  rights  of  the 
parties,  since  the  subject  will  be  presented  to  the  Commission 
from  every  angle. 

When  the  testimony  is  closed,  it  shall  be  filed  in  the  office  of 
the  Commission.  If  upon  such  hearing  the  Commission  shall  be 
of  the  opinion  that  the  method  of  competition  in  question  is  pro- 
hibited by  either  of  these  laws,  it  shall  make  a  report  in  writing 
in  which  it  shall  state  its  findings  as  to  the  facts,  and  shall  issue 
and  cause  to  be  served  on  such  person,  partnership,  or  corporation 
an  order  requiring  such  party  to  cease  and  desist  from  using  such 
methods  of  competition.  Until  such  order  is  disobeyed  the  Com- 
mission retains  full  possession  and  jurisdiction  of  the  matter ;  but 
should  the  defendant  fail  to  comply  with  the  terms  of  the  order, 
either  that  party  or  the  Commission  may  file  a  transcript  of  the 
entire  record  with  United  States  Circuit  Court  of  Appeals  which 
shall  then  assume  jurisdiction  as  to  the  enforcement  of  the  order, 
and  by  its  decree  affirm,  modify  or  set  it  aside,  as  the  case  may 
require.  The  findings  of  the  Commission,  if  supported  by  evi- 
dence, are  binding  upon  the  court,  though  it  is  provided  that  the 
matter  may  be  retransferred  to  the  Commission  for  further  testi- 
mony if  the  court  requires  more  light  upon  one  or  more  aspects 
of  the  case. 

Means  for  Review  Provided. — The  wording  of  the  statute  is 
not  altogether  clear  as  to  the  practice  connected  with  the  time 
and  manner  of  service  required  to  make  effective  the  orders  of 
the  Commission ;  but  no  doubt  these  points  are  among  the  details 
that  will  be  elaborated  in  the  rules.  As  has  been  stated,  the  Com- 
mission retains  full  jurisdiction  of  the  matters  pending  before  it 
until  such  time  as  a  transcript  is  filed  with  the  United  States  Cir- 
cuit Court  of  Appeals.  Until  such  time  of  filing  the  Commission 
may  modify  or  set  aside  in  whole  or  in  part  any  report  or  order 
issued  under  either  of  the  Sections,  5  or  n,  as  specified  above. 
The  nature  of  this  review  must  be  judicial,  for  the  Constitution 
has  been  held  to  forbid  the  delegation  to  the  Circuit  Court  of  Ap- 
peal of  authority  of  any  description  other  than  judicial. 


PROVISIONS  FOR  ENFORCEMENT.  41 

The  scheme  which  the  statute  contemplates  is  quite  obvious. 
The  Congressional  intent  is  that  the  Circuit  Court  of  Appeals 
shall  constitute  a  reviewing  commission,  which  has  ample  author- 
ity to  cancel,  alter  or  confirm  the  original  ruling.  The  court,  as 
we  have  seen,  must  act  only  upon  the  testimony  or  proceedings 
before  the  original  Commission  or  Board ;  it  has  no  right  to  add 
to  or  change  the  record,  excepting  the  resultant  order. 

4.  CONGRESS  PRESCRIBED  ONLY  LIMITED  REVIEW. 

Procedure  Affords  a  Limited  Review. — This  subject  was 
debated  before  Congressional  committees  and  a  diversity  of  opin- 
ion as  to  the  nature  and  extent  of  the  review  of  the  Commission's 
rulings  developed  at  those  sessions.  After  much  argument,  the 
consensus  of  opinion  was  that  a  "limited  review"  was  called  for, 
viz :  that  the  Appellate  Court  should  have  no  right  to  introduce 
new  evidence,  while  retaining  full  power  to  revise  the  Commis- 
sion's order  in  the  premises.2 

This  view  prevailed  in  the  final  draft,  and  it  is  now  incorporated 
in  the  statute  that  where  the  Circuit  Court  of  Appeals  sees  that 
further  evidence  is  called  for  in  the  protection  of  the  rights  of  any 
party,  it  may  send  the  matter  back  to  the  Commission,  with  orders 
to  take  additional  testimony  upon  such  terms  as  seem  equitable 
and  fair.  The  Commission  thereupon  resumes  jurisdiction  and 
may  recommend  to  the  Circuit  Court  of  Appeals  to  revise  or  re- 
voke its  former  rulings  when  it  returns  such  additional  evidence. 
No  doubt  the  court  may  take  testimony  upon  the  question  whether 
the  case  should  be  returned  to  the  Commission  for  further  testi- 
mony, though  nothing  specifically  appears  in  the  law  on  that  point. 

Three  Separate  Opinions  Provided;  with  Final  Review  by 
Supreme  Court. — The  general  plan,  accordingly,  provides  for 
three  and  under  certain  circumstances  four  opinions  before  the 
final  decree  becomes  effective  in  a  given  case :  (a)  The  Federal 
Trade  Commission  or  Interstate  Commerce  Commission,  as  the 
situation  calls  for,  files  its  complaint,  hears  the  testimony  and 
enters  its  order,  (b)  Upon  a  proceeding  to  enforce  said  order 
or  upon  an  appeal  by  any  defendant  the  Circuit  Court  of  Appeals 
has  authority  to  review  the  order  and  to  enter  its  own  decree, 
canceling,  changing,  or  affirming  said  mandate,  but  only  on  the 

2  For  substance  of  the  discussion  of  the  proposed  Interstate  Trade  Gotn- 
mission  bill,  in  the  Senate,  in  1912,  see  Appendix  M,  pages  3O4-334- 


42  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

original  record,  (c)  Where  the  Circuit  Court  of  Appeals  requires 
further  testimony,  it  can  return  the  matter  to  the  Commission,  or 
Board,  and  said  body  may  make  recommendation  as  to  the  form 
of  the  findings  which  it  thinks  proper  after  taking  such  additional 
evidence,  (d)  As  a  final  precaution  and  safeguard,  the  judgment 
and  decree  of  the  Circuit  Court  of  Appeals  is  by  special  provision 
made  subject  to  review  by  the  Supreme  Court  upon  certiorari,  as 
provided  in  Sec.  240  of  the  Judicial  Code.3 

It  must  be  apparent  that  the  legislative  bodies  have  devoted  ex- 
ceptional thought  and  care  to  the  preparation  of  these  statutes, 
seeking  to  throw  about  the  business  affairs  of  the  country  an  at- 
mosphere of  conservatism  that  would  allay  and  remove  any  just 
occasion  for  fear  or  alarm.  Certainly  an  abundant  opportunity  is 
provided  for  discussion  and  review  before  the  order  or  decree  of 
the  supervising  commission,  board  or  court  becomes  effective  and 
binding. 

5.  COMMENDATORY  RULINGS  NOT  PART  OF  LEGISLA- 
TIVE PLAN. 

No  Commendatory  Ruling  Authorized. — One  other  feature 
was  taken  up  in  the  debates  upon  this  measure  and  while  it  is  not 
incorporated  in  the  statute,  some  mention  thereof  may  be  useful 
as  well  as  interesting  in  this  connection  and  at  this  time.  We 
refer  to  the  proposal  to  make  it  lawful  for  the  Commission  or 
Board  to  enter  an  order  approving  the  conduct  of  a  given  indivi- 
dual, partnership  or  corporation,  in  the  premises,  thereby  fixing 
a  standard  and  setting  its  official  seal  of  approbation  upon  good 
behavior  in  contradistinction  to  issuing  mandates  to  restrain  evil 
doing.  While  it  would  no  doubt  be  sufficient  to  say  that  this 
provision  was  not  retained  in  the  final  draft  of  the  organic  statutes 
creating  this  new  departure  and  new  department  in  Federal  af- 
fairs, still  it  seems  to  us  that  the  elimination  of  this  power  to  ap- 
prove contains  a  somewhat  deeper  significance  than  attaches  to 
the  removal  of  any  other  proposed  change. 

The  words  of  the  President's  message  delivered  before  Con- 
gress January  20,  1914,  wherein  he  dealt  with  trusts  and  monop- 
olies and  urged  legislation  to  create  a  trade  commission, — con- 
tained the  expression,  "the  opinion  of  the  country  would  in- 
stantly approve  such  a  commission."  The  whole  tenor  of  this 

3  See  Code  provisions  contained  in  Appendix  I,  pages  291-293. 


PROVISIONS  FOR  ENFORCEMENT.  43 

message  shows  he  intended  and  expected  that  the  commission 
should  have  advisory  and  commendatory  powers,  in  addition  to 
its  administrative  and  judicial  functions;  and  that  the  first- 
named  powers  would  receive  public  approbation. 

The  Committee  on  Interstate  Commerce,  in  its  report  on  the 
proposed  Trade  Relations  Bill  (one  of  the  five  measures  com- 
prised in  substance  in  the  terms  of  the  Federal  Trade  Commis- 
sion Act  and  the  Clayton  Law),  set  forth  the  committee's  views 
on  this  important  topic  in  the  following  words:  "There  ought 
to  be  a  way  in  which  men  in  such  a  venture  could  submit  their 
plan  to  the  government  and  inquiry  made  as  to  the  legality  of 
such  a  transaction;  and,  if  the  government  was  of  the  opinion 
that  competitive  conditions  would  not  be  substantially  impaired, 
there  should  be  an  approval,  and  in  so  far  as  the  lawfulness  of 
the  exact  thing  proposed  is  concerned  there  should  be  a  decision, 
and  if  favorable  to  the  proposal  there  should  be  an  end  to  that 
particular  controversy  for  all  time." 

It  is  an  old  saying  that  republics  are  ungrateful ;  and  certainly 
where  political  pressure  has  not  fortified  the  claims  of  the  peti- 
tioning party,  history  records  much  to  be  regretted  in  that  re- 
spect. The  unpaid  French  spoliation  claims,  dating  back  more 
than  a  century,  constitute  a  case  in  point.  But  this  conduct  is 
due  as  we  believe,  more  to  defects  in  political  viewpoint  and 
scheme  of  government,  than  to  delinquency  in  morals.  In  brief, 
republics  do  not  lend  themselves  readily  to  commendatory  legisla- 
tion, and  bureaucratic  ideas  are  permitted  to  obscure  the  essential 
equities  of  the  case.  That  this  is  a  defect  may  readily  be  shown 
by  argument  or  by  reflection. 

Monarchial  institutions  on  the  contrary,  in  this  particular,  pro- 
vide a  more  elastic  means  for  administering  things  political. 
There  an  actual  person  and  not  an  intangible  ideal  entity — the 
public — rules  the  state;  and  human  needs,  limitations  and  like- 
wise their  demerits  or  rights  to  receive  rewards  can  all  be  brought 
forward,  urged  and  passed  upon  in  an  atmosphere  of  practical  re- 
quirements and  human  sympathy.  The  eye  of  the  master  is  ever 
present  in  theory  at  least;  it  scans  the  patient  labors  in  the  in- 
ventor's laboratory;  attends  the  explorer  upon  his  adventures; 
marks  with  approval  the  results  of  the  painter's  brush,  or  the  en- 
graver's tool ;  and  it  commends  the  merchant  who  through  years 
of  fair  dealing  has  established  a  reputation  which  is  a  standard 
of  honesty  throughout  the  seven  seas.  Upon  the  latter  knighthood 


44  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

or  higher  titles  are  conferred  and  the  state  marks  him  by  public 
acts  and  in  effect  says :  "Thus  shall  it  be  done  to  the  man  whom 
the  king  delighteth  to  honor." 

Nothing  of  this  nature  is  practical,  hardly  possible,  in  a  repub- 
lic. It  is  true  the  "Legion  of  Honor"  has  been  established  in 
France ;  and  the  "Thanks  of  Congress"  confer  some  mild  form 
of  favor  for  those  who  have  done  deeds  of  exceptional  patriotism 
or  prowess.  This  attempt  at  conferring  distinction  where  merit 
exists  is  some  evidence  that  the  people  of  the  United  States  recog- 
nize the  existence  of  a  plane  of  equity  which  statutes  and  court 
decisions  do  not  attain  unto.  They  indicate  that  the  citizens  of  the 
American  Republic  realize  the  defects  of  their  qualities  and  are 
ready  and  willing  to  supplement  and  build  up  the  weak  places  in 
the  scheme  of  government  we  inherit  from  our  forefathers.  Per- 
haps at  some  future  time,  and  in  some  effectual  way  the  two 
schemes  of  government  may  be  winnowed  over,  and  the  best  com- 
bined in  one.  Certainly,  there  could  be  no  harm  and  much  good 
in  permitting  the  Commission,  Board  or  Court  to  mark  with  ap- 
proval a  record  of  business  affairs  where  the  competition  has 
been  fair  and  the  rewards  won  have  been  gained  without  fear  or 
favor.  Such  commendation  could  and  should  be  confined  to  the 
particular  matter  in  hand  and  relate  solely  to  the  past.  Future 
acts  would  call  for  future  scrutiny.  Perhaps  this  digression  may 
seem  to  some  uncalled  for ;  to  others  we  trust  "the  right  to  com- 
mend" will  seem  to  be  a  useful  adjunct  to  a  governing  Commis- 
sion, Board  or  Court. 

Procedures  under  these  Statutes  Stated  and  Compared. — In 
concluding  this  chapter  upon  enforcement  it  may  be  well  briefly  to 
point  out  again  the  classes  of  cases  to  which  the  procedure  ap- 
plies. In  Section  5  of  the  Federal  Trade  Commission  Act  the 
statute  empowers  the  Commission  to  prevent  unfair  methods  of 
competition  in  commerce ;  and  to  effectuate  that  purpose,  directs 
said  body  to  issue  and  serve  a  summons  with  a  notice  of  a  hearing 
upon  any  such  person,  partnership  or  corporation  whenever  it 
shall  have  reason  to  believe  said  individual,  firm  or  corporation 
has  been  engaged  in  said  unlawful  practices.  It  is  apparent  that 
a  considerable  degree  of  latitude  and  discretion  is  lodged  in  the 
Commission,  since  the  statute  further  provides  that  such  process 
shall  be  issued  and  served  only  when  "it  shall  appear  to  the  Com- 
mission that  a  proceeding  by  it  in  respect  thereof  would  be  to  the 


PROVISIONS  FOR  ENFORCEMENT.  45 

interest  of  the  public" ;  but  as  we  have  dwelt  upon  that  qualifica- 
tion quite  fully  in  the  preceding  pages  of  this  chapter,  that  par- 
ticular phase  of  the  subject  will  not  be  treated  of  further  in  this 
place. 

By  reference  to  Section  n  of  the  Clayton  Law,  two  points  of 
difference  will  be  noticed:  (i)  the  fact  that  the  item  of  public 
interest  is  presumed;  (2)  the  violation  of  Sections  2,  3,  7,  and  8 
of  that  law  constitute  the  occasion  for  issuing  and  serving  the 
complaint  and  notice.  Referring  to  the  provisions  of  the  Clayton 
Law,  it  there  appears  that  Section  2  relates  to  price  discrimina- 
tion; Section  3  to  conditional  or  tying  contracts;  Section  7  to 
corporate  stock  ownership  in  a  competing  corporation  or  holding 
company,  and  Section  8  to  interlocking  directorates. 

These  four  sections  taken  together  comprise  all  the  formative 
features  of  the  Clayton  Law  and  the  procedure  for  their  enforce- 
ment vitalizes  the  entire  statute.  Consequently,  it  is  extremely 
necessary  to  those  brought  into  those  proceedings  or  practicing 
before  that  body  that  the  subject  should  be  thoroughly  under- 
stood. The  plan  is  simple  and  direct,  and  careful  reading  of  the 
statute  in  conjunction  with  these  comments  and  suggestions 
should  and  we  believe  will  remove  any  existing  doubts  or  uncer- 
tainties. 

No  Express  Provision  to  Review  Court  Ruling  as  to  Resub- 
mission. — Returning  to  the  express  provisions  of  these  statutes, 
it  should  be  noted  that  Congress  has  not  in  terms  provided  for 
any  review  in  cases  where  the  party  has  applied  for  and  has  been 
refused  the  right  to  have  the  matter  returned  to  the  Commission 
or  Board  for  further  testimony.  It  may  be  that  the  legislative 
intent  was  that  the  decision  of  the  Circuit  Court  of  Appeals  should 
be  final ;  but  it  is  to  be  noted  that  this  phase  of  these  litigations 
was  left  for  the  final  consideration  of  the  Supreme  Court  on  ap- 
plication to  review  the  judgment  obtained,  as  provided  in  Section 
240  of  the  Judicial  Code,4  under  express  permission  conferred  by 
the  Federal  Trade  Commission  Act,  Section  5,  paragraph  4. 

In  corresponding  Sections  5  and  1 1  of  the  respective  statutes  it 
is  directed  that  the  Circuit  Court  of  Appeals  shall  expedite  these 
proceedings  by  giving  them  preference  over  other  cases;  also, 
that  no  order  of  the  Commission  or  judgment  of  the  court  to  en- 
force the  same  shall  in  any  wise  relieve  or  absolve  any  person, 

4  See  Appendix  I,  pages  291-293. 


46  MANUAL  otf  FEDERAL  TRADE  COMMISSION. 

partnership,  or  corporation  from  any  liability  under  the  Anti- 
trust acts. 

6.  SERVICE  OF  PROCESS. 

Method  of  Service. — It  is  also  provided  in  what  manner  orders 
or  other  process  of  the  Commission  or  Board  shall  be  served. 
Such  service  may  be  made  by  any  one  duly  authorized  by  the 
Commission,  as  follows :  ( I )  by  delivering  a  copy  thereof  to  the 
person  to  be  served,  or  to  a  member  of  the  partnership  to  be 
served,  or  to  the  president,  secretary  or  other  executive  officer 
or  a  director  of  the  corporation  to  be  served;  or  (2)  by  leaving 
a  copy  thereof  at  the  principal  office  or  place  of  business  of  such 
person,  partnership,  or  corporation;  or  (3)  by  registering  and 
mailing  a  copy  thereof  addressed  to  such  person,  partnership,  or 
corporation  at  his  or  its  principal  place  of  business.  The  means 
of  proof  of  such  service  are  also  specified  in  the  statute,  (Federal 
Trade  Commission  Act,  Sec.  5,  page  252,  post;  Clayton  Law,  Sec. 
u,  pages  270,  271,  post. 


CHAPTER  VI. 

BANKS,— PROVISIONS  RELATING  THERETO  CON- 
TAINED IN: 

1.  Federal  Trade  Commission  Act. 

2.  Clayton  Law. 

i.  BANK  REGULATIONS  UNDER  TRADE  COMMISSION 
ACT. 

A  New  Federal  Policy. — The  new  legislative  standard — the 
declaration  of  a  new  Federal  policy  contained  in  the  words  pro- 
hibiting "unfair  methods  of  competition  in  commerce" — consti- 
tutes the  backbone  of  the  Trade  Commission  Act. 

Twofold  Reason  for  Exemption  of  Banks. — The  definition  of 
the  power  conferred  is  very  broad  and  its  application  so  universal 
as  to  cover  individuals,  partnerships  and  corporations  doing  busi- 
ness in  interstate  or  foreign  trade ;  but  no  right  is  given  to  enforce 
the  provisions  as  against  banks  and  common  carriers.  The  dis- 
tinction is  specially  mentioned  in  Section  6,  where  banks  and 
common  carriers  are  expressly  exempted  from  the  investigating 
powers  of  the  Commission,  and  from  the  obligation  to  make  re- 
ports. Probably  these  exceptions  only  occur  when  the  bank  at- 
tends strictly  to  financial  business  and  does  not  undertake  promo- 
tions or  matters  outside  of  banking  affairs,  and  the  same  rule  ap- 
plies to  common  carriers.  Each  of  these  forms  of  business  activ- 
ity has  its  own  Commission  or  Board  to  check  off  its  behavior  and 
to  prescribe  rules  and  regulations  therefor.  Accordingly  it  would 
be  a  duplication  of  liability  to  place  them  within  the  jurisdiction 
of  the  Federal  Trade  Commission,  provided,  of  course,  that  they 
each  confine  themselves  to  their  usual  lines. 

Furthermore,  early  decisions  by  the  Supreme  Court  held  bank- 
ing to  be  outside  of  the  commerce  clause  of  the  Constitution,  and 
hence  State  legislatives  were  given  permission  to  assess  local  taxes 
thereon.  But  the  refusal  of  the  court  to  permit  Congress  to  as- 
sume exclusive  jurisdiction  of  banking,  on  the  score  that  engaging 
in  finance  is  not  "commerce,"  did  more  than  decide  the  bare  ques- 
tion at  issue.  These  decisions1  made  it  of  doubtful  legality  to  in- 

i  Nathan  v.  Louisiana,  8  How.  (U.  S.),  73,  (1850) ;  Paul  v.  Virginia, 
8  Wall  168  (1868)  ;  see  also  New  York  Life  Insurance  Co.  v.  Deer  Lodge 
County,  231  U.  S.  498  (1913). 

47 


48  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

elude  banking  in  any  statute  regulatory  of  commerce.  For  one 
or  both  of  these  reasons,  therefore,  the  control  of  banking  is  left 
with  the  Federal  Reserve  Board,  instead  of  adding  it  to  the  duties 
already  appertaining  to  the  Federal  Trade  Commission. 

a.  BANK  REGULATIONS,  UNDER  THE  CLAYTON  LAW. 

General  Remarks. — While  it  may  appear  to  some  persons  that 
the  previous  remarks  about  the  provisions  as  to  banks  and  bank- 
ing contained  in  the  Federal  Trade  Commission  Act  suggest  the 
famous  essay  on  the  snakes  of  Ireland, — "There  are  no  snakes  in 
Ireland," — still  it  should  be  borne  in  mind  that  the  machinery 
for  carrying  out  the  provisions  of  the  Clayton  Law  are  provided 
by  the  earlier  act ;  also,  that  it  is  only  by  exemption  from  rules 
otherwise  general  in  their  application  that  banks  are  relieved  from 
such  business  regulations,  or  rather  regulations  from  that  quarter 
instead  of  or  in  addition  to  very  minute  scrutiny  on  the  part  of 
the  Federal  Reserve  Board. 

Principal  Functions  of  Clayton  Law,  in  their  Relation  to 
Banks. — The  principal  functions  of  the  Clayton  Law  are  to  regu- 
late or  prohibit — (i)  Price  Discrimination;  (2)  "Tying"  or  Con- 
ditional Contracts;  (3)  Ownership  by  One  Corporation  in  the 
Stock  of  Another;  (4)  Interlocking  Directorates. 

Judicial  Construction  does  Not  Include  Banking  as  Com- 
merce.— From  what  has  been  said  about  the  Supreme  Court  de- 
cisions holding  that  banking  is  not  commerce,  it  will  be  readily 
observed  that  the  Federal  Trade  Commission  is  not  the  proper 
tribunal  where  such  questions  as  are  involved  in  (i)  Price  Dis- 
crimination, or  (2)  Tying  Contracts,  can  be  adjudicated.  Its  very 
existence  was  intended  to  be  a  protest  against  certain  "unfair 
methods  of  competition  in  commerce,"  and  to  attempt  to  regulate 
matters  definitely  excluded  from  the  "commerce  clause"  of  the 
Constitution  by  judicial  construction,  would  be  to  invite  rulings 
which  would  undo  and  render  useless  all  the  labor  involved. 
Where  a  bank  or  common  carrier  engages  in  merchandising  trans- 
actions, directly  or  indirectly,  however,  the  Federal  Reserve  Board 
or  the  Interstate  Commerce  Commission  are  respectively  given 
full  power  and  authority  to  enforce  these  provisions,  by  Section 
ii  of  said  act;  and  the  procedure  for  the  orderly  conducting  of 
such  matters  is  therein  fully  set  forth. 

The  same  reasoning,  however,  leads  us  to  conclude  that  func- 


BANKS.  49 

tions  3  and  4,  to  wit:  Stock  Ownership  and  Interlocking  Di- 
rectorates, are  provisions  of  the  Clayton  Law  which  apply  with 
full  force  or  effect  to  banks,  the  same  as  to  other  kinds  of  cor- 
porations. We  have  seen  that  whereas  in  the  Federal  Trade  Com- 
mission Act  unfair  methods  of  competition  are  declared  illegal  and 
those  provisions  are  made  equally  operative  against  individuals, 
firms  or  corporations,  there  is  no  provision  therein  for  the  enforce- 
ment of  that  rule  against  banks  or  common  carriers.  This  omission 
could  not  have  been  accidental;  it  must  have  resulted  from  a 
serious  doubt  in  the  Congressional  mind  as  to  whether  "banking" 
was  included  within  its  powers  to  legislate,  as  provided  in  the 
"Commerce  Clause"  of  the  Constitution.2  If  not  so  included  (and 
the  decisions  mentioned  and  cited  on  page  47  indicate  a  negative 
view  by  the  court),  the  insertion  of  such  a  regulation  in  the  Fed- 
eral Trade  Commission  Act  would  be  simply  vain  repetition 
and  surplusage.  This  manner  of  reading  the  statute  in  the  light 
of  attendant  circumstances  and  of  translating  its  novel  terms  and 
expressions  into  words  of  known  significance,  conforms  to  the  re- 
quirements of  reason  as  well  as  to  the  dictum  by  Mr.  Justice 
Peckham,  in  United  States  v.  Trans-Missouri  Freight  Associa- 
tion, 166  U.  S.  290  (318) :  "The  only  proper  way  to  construe  a 
legislative  act  is  from  the  language  used  in  the  act,  and,  upon  oc- 
casion, by  a  resort  to  the  history  of  the  times  when  it  was  passed." 

But  while  the  Federal  Trade  Commission  Act  does  not  under- 
take anything  approaching  a  general  regulation  of  the  affairs  of 
banks,  it  does  provide  the  machinery  for  enforcing  certain  pro- 
visions of  the  Clayton  Law  in  relation  thereto.  The  constitutional 
limitation  which  prevents  Congress  from  so  legislating  as  to  in- 
clude banks  within  the  scope  of  the  statutes  which  govern  "com- 
merce" has  its  effect  in  placing  financial  institutions  outside  the 
provisions  against  price  discrimination  and  tying  contracts; 
but  this  does  not  appear  to  be  any  reason  why  the  other  two 
main  features  of  the  Clayton  Law,  viz :  Inter-corporation  Stock- 
ownership  and  Interlocking  Directorates,  should  not  be  esteemed 
functions  that  are  in  full  force  and  operation  in  matters  pertain- 
ing to  bank  management. 

Stock  Ownership  by  Corporations  Regulated. — Assuming, 
therefore,  that  such  is  the  case,  it  should  be  noted,  that  the  first  of 

2  For  constitutional  provisions  relevant  to  the  general  subject,  see  Ap- 
pendix F,  pages  286,  287,  post. 

4 


5O  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

these  two  inhibitions,  viz :  as  to  stock  ownership,  applies  only  to 
corporations.  The  second  paragraph  of  Section  7  of  the  Clayton 
Law  contains  the  following: 

"No  corporation  shall  acquire,  directly  or  indirectly,  the 
whole  or  any  part  of  the  stock  or  other  share  capital  of  two 
or  more  corporations  engaged  in  commerce  where  the  ef- 
fect of  such  acquisition,  or  the  use  of  such  stock  by  the 
voting  or  granting  proxies  or  otherwise,  may  be  to  sub- 
stantially lessen  competition,  between  such  corporations,  or 
any  of  them,  whose  stock  or  other  capital  is  so  acquired,  or 
to  restrain  such  commerce  in  any  section  or  community,  or 
tend  to  create  a  monopoly  of  any  line  of  commerce." 

The  intent  of  the  foregoing  is  clearly  to  prevent  banks — neces- 
sarily within  the  scope  of  the  prohibitive  words  "no  corporations" 
— from  becoming  central  stations  for  trust-control,  or  in  other 
words,  to  prohibit  the  turning  of  banks  into  "holding  companies" 
of  the  familiar  type. 

Purchasers  of  shares  of  stock  for  investment,  or  the  formation 
of  subsidiary  corporations  are  acts  which  are  specially  exempted 
from  the  legislative  prohibition ;  while  broad  as  are  the  indicting 
words,  they  do  not  condemn  stock-ownership  by  individuals  to 
any  extent  in  any  corporation, — such  prohibition  as  exists  must  be 
found  elsewhere  in  the  statutes. 

Special  Regulations  Affecting  Corporations  Engaged  in 
Banking. — The  next  provision,  Section  8,  of  the  Clayton  Law, 
directly  concerns  not  only  directors  but  officers  and  employees  of 
banks,  in  common  with  common  carriers  and  other  corporations, 
subject  to  certain  limitations,  as  will  be  hereafter  mentioned.  In 
the  case  of  provisions  regulating  other  classes  of  corporations,  the 
law  concerns  itself  only  with  the  doings  of  the  members  of  the  di- 
recting board.  The  obvious  intent  of  Congress  was  to  prevent  the 
accumulation  of  too  great  financial  power  in  the  hands  of  any  in- 
dividual, or  of  any  group  of  men,  and  with  that  end  in  view  the 
legislative  prohibition  extends  the  scope  of  the  interdicting  power 
to  the  interlocking  of  boards  of  directors  in  official  positions  or 
even  in  positions  of  employment,  in  certain  banking  institutions. 
These  requirements  are  so  unusual  as  to  be  an  anomaly  in  our 
laws,  and  to  partake  to  some  extent  of  the  paternalism  so  familiar 
in  continental  Europe. 


BANKS.  51 

However  strange  or  unusual  these  provisions  may  appear  to  the 
citizen  unaccustomed  to  foreign  institutions  and  methods,  he 
will  certainly  maintain  that  authority  should  be  found  in  the 
Constitution  for  every  precaution  requisite  to  the  careful  super- 
vision as  well  as  the  instituting  of  banking  enterprises.  Section  6 
thereof  confers  upon  Congress  the  power: 

"To  borrow  money  on  the  credit  of  the  United  States  *  *  * 
To  coin  money,  regulate  the  value  thereof  *  *  *  To  make 
all  laws  which  shall  be  necessary  and  proper  for  carrying  into 
execution  the  foregoing  powers." 

While  these  powers  are  not  explicit,  they  have  sufficed  to  meet 
the  nation's  needs  to  the  present  time ;  and  their  general  terms,  no 
doubt,  clothe  Congress  with  the  requisite  authority. 

Since  the  State,  according  to  Edmund  Burke,  is  "a  partnership 
in  all  science,  a  partnership  in  all  art,  a  partnership  in  every  vir- 
tue and  in  all  perfection,"  it  is  certainly  incumbent  upon  such  a 
corporate  entity  to  see  to  it  that  bank-funds  are  not  employed  for 
the  ulterior  purposes  and  profits  of  the  managing  directors  and 
officers.  Nothing  so  discourages  thrift  and  saving  as  to  permit  in- 
stitutions to  display  the  sign  "Bank"  and  to  use  all  the  insignia  of 
a  government-controlled  place  of  deposit  for  citizens,  whereas  in 
point  of  fact  the  State  is  a  deficient  guardian, — at  most  a  step- 
parent,— and  takes  no  deep  concern  in  the  actual  employment  or 
safety  of  the  moneys  which  were  deposited  on  its  implied  prom- 
ise to  exercise  a  watchful  and  supervising  care  and  to  see  to  it  that 
reasonable  prudence  is  exercised  and  the  depositor's  interest 
protected  and  conserved.  To  do  less  is  to  default  in  one  of  the 
plain  duties  of  a  civilized  government.  Our  faults  of  omission 
have  been  numerous  and  frequent  in  the  past,  and  the  volume  of 
foreign  money  orders  transferring  funds  to  government-con- 
trolled savings  banks  abroad,  has  been  in  like  proportion.  But 
with  the  inauguration  of  the  postal  savings  bank  and  with  the 
supervising  as  well  as  the  ministerial  powers  conferred  upon  the 
Federal  Reserve  Bank,  it  seems  probable  a  new  era  has  begun  ; 
and  that  exploitations  of  the  many  by  the  few, — to  the  extent 
that  the  financial  preferences  growing  out  of  interlocking  bank 
directorates  afford, — will  not  be  easy  of  accomplishment  in  bank- 
ing circles  hereafter. 

These  provisions  at  first  or  even  second  reading  seem  curious 
enough;  but  upon  reflection  it  will  probably  appear  evident  that 


52  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

Congress  has  builded  wisely, — perchance  better  than  it  knew, — in 
erecting  the  present  defences  against  monopoly  in  banking.  It 
must  be  admitted  that  the  language  of  the  first  and  second  para- 
graphs is  ambiguous,  and  that  it  is  not  aided  by  paragraph  four  of 
the  same  section.  Still  the  general  meaning  is  plain,  and  no  doubt 
the  doubtful  passages  will  in  future  receive  an  official  construc- 
tion by  the  Commission  or  the  court.  It  was  the  evident  purpose 
of  Congress  to  prohibit  dual  or  plural  (interlocking)  representa- 
tion, upon  the  board  of  directors  in  banking  institutions  of  large 
resources ;  and  like  inhibitions  exist  as  to  officials  and  employees. 

The  unit  of  size  adopted  for  the  purpose  is  where  a  fund  of 
assets  of  various  descriptions  amounting  to  more  than  $5,000,000 
of  actual  value  exists  in  the  aggregate. 

After  two  years  from  the  date  of  approval  of  the  Clayton  Law, 
to  wit,  after  October  15,  1916,  "no  person  shall  at  the  same  time 
be  a  director  or  other  officer  or  employee  of  more  than  one  bank, 
banking  association  or  trust  company,  organized  or  operating 
under  the  laws  of  the  United  States,  either  of  which  has  deposits, 
surplus  or  undivided  profits  aggregating  more  than  $5,000,000" ; 
and  it  is  further  provided  that  "no  private  banker  or  person  who  is 
a  director  in  any  bank  or  trust  company,  organized  and  operating 
under  the  laws  of  a  State,  having  deposits,  capital,  surplus  and  un- 
divided profits  aggregating  more  than  $5,000,000,  shall  be  eligible 
to  be  a  director  in  any  bank  or  banking  association  organized  or 
operating  under  the  laws  of  the  United  States," — (Section  8). 

The  annual  returns  or  reports  of  the  preceding  fiscal  year  shall 
govern  in  estimating  the  resources  of  the  bank ;  and  a  director, 
officer  or  employee  lawfully  appointed  may  continue  for  one  year 
under  said  engagement. 

Consideration  of  the  terms  of  the  foregoing  provisions  will  dis- 
close that  no  person  can  be  an  officer  or  employee  in  more  than 
one  national  bank  of  $5,000,000  resources ;  and  that  the  same  lim- 
itations attaches  in  the  case  of  a  private  banker  with  equal  means, 
or  of  a  director  in  a  State  bank  with  assets  to  bring  it  into  the 
same  class. 

Furthermore,  out  of  abundant  caution,  Congress  has  made  it 
unlawful  for  any  individual  to  accept  office  as  a  director  or  offi- 
cer or  employee  in  a  national  bank  in  a  city  of  more  than  200,000 
inhabitants,  provided  he  already  acts  as  director  upon  the  board 
of  any  other  national  or  State  bank  located  at  the  same  place,  or 


BANKS.  53 

is  an  officer  or  employee  thereof.  This  prohibition  also  extends 
to  private  bankers,  residing  in  cities  of  the  size  specified  above. 
These  provisions  are  certainly  novel;  but  upon  the  whole  they 
seem  calculated  to  eliminate  the  factor  of  a  "money-trust,"  if 
such  exists. 

Certain  Exceptions  Noted. — There  are  certain  exceptions  to 
the  rule,  which  must  be  mentioned  before  we  proceed  further  in 
our  general  subject.  Thus,  savings  banks  not  having  a  stock  cap- 
ital represented  by  shares  are  exempted;  also,  one  additional 
banking  institution  where  all  the  stock  of  the  second  company  is 
owned  by  shareholders  of  the  first ;  and  there  is  a  further  pro- 
viso that  a  director  of  Class  A  of  a  Federal  Reserve  Bank  may 
be  an  officer  or  director,  or  both  an  officer  and  director  in  one 
member  bank.  No  doubt  ample  precautions  are  provided  in  the 
Federal  Reserve  Bank  Act  for  safe-guarding  public  interests,  and 
cumulative  means  of  protection  are  neither  necessary  nor  desir- 
able. Among  the  ambiguous  provisions  of  Section  8  is  one  that 
no  person  shall  at  the  same  time  be  a  director  in  two  or  more 
competing  corporations,  any  one  of  which  has  ass-ets  of  more  than 
$1,000,000,  engaged  in  whole  or  in  part  in  commerce;  but  while 
the  paragraph  does  not  further  define  or  limit  the  activities  of 
the  corporations  of  the  type  described,  the  lawmakers  excepted 
from  the  operation  of  the  statute  corporations  engaged  in  bank- 
ing and  doing  business  as  common  carriers.  This  express  exemp- 
tion of  banks  removes  the  foregoing  paragraph  from  the  number 
of  those  that  relate  to  and  govern  this  phase  of  financial  business. 

As  already  stated  at  page  52  hereof,  directors,  officers  and  em- 
ployees remain  eligible  to  election  until  the  expiration  of  two 
years  from  the  passage  of  the  Clayton  Law,  i.  e.,  until  October 
15,  1916,  and  until  the  term  of  one  year  thereafter  has  passed. 
This  comparatively  long  period  preliminary  to  the  enforcement  of 
the  law  was  no  doubt  intended  to  afford  the  public  ample  time 
in  which  to  adjust  its  affairs  to  the  code  of  procedure  involved  in 
carrying  out  this  statutory  plan.  Much  depends  upon  the  installa- 
tion of  the  Federal  Reserve  Banking  System ;  with  that  scheme 
of  public  finance  in  full  operation  these  requirements  should  be- 
come effective  as  mere  operative  details. 

Provisions  Applicable  to  Dealings  with  Common  Carriers. — 
Since  private  banking  houses  and  to  some  extent  banking  corpora- 
tions have  dealings  in  securities  with  common  carriers  engaged 


54  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

in  commerce,  the  provisions  of  Section  10  of  the  Clayton  Law 
have  their  importance  to  the  banking  world. 

The  definition  "common  carriers  engaged  in  commerce"  would 
no  doubt  include  telephone  and  telegraph  companies  and  palace  or 
sleeping  car  corporations,  as  well  as  railroad  and  steamship  lines, 
and  other  classes  of  concerns  engaged  in  transport  service;  so 
that  the  field  is  very  wide.  The  purport  of  the  provision  in  ques- 
tion is  that  where  two  corporations  are  respectively  a  common 
carrier  and  a  company  supplying  or  dealing  in  securities  or  equip- 
ment and  business  relations  have  existed  to  the  extent  of  more 
than  $50,000  in  any  year, — 

"when  the  said  common  carrier  shall  have  upon  its  board 
of  directors  or  as  its  president,  manager,  or  as  its  purchas- 
ing or  selling  officer  or  agent  in  the  particular  transactions, 
any  person  who  is  at  the  time  a  director,  manager,  or  pur- 
chasing or  selling  officer  or  agent  of,  or  who  has  any  sub- 
stantial interest  in,  such  other  corporation,  firm,  partner- 
ship or  association" — 

then  and  thereafter  contracts  shall  be  made  with  the  second  com- 
pany only  upon  competitive  bids.  The  Interstate  Commerce 
Board  shall  prescribe  the  regulations  governing  said  competitive 
bidding;  the  names,  etc.,  of  the  officers,  directors  and  general 
manager  of  the  bidder,  if  a  corporation,  shall  be  given  with  the 
bid;  or  if  it  be  a  partnership  or  firm,  then  the  names  of  the 
partners  must  appear.  Violation  of  this  provision  is  penalized  at 
$25,000  for  the  common  carrier;  while  the  consenting  director, 
agent,  manager  or  officer  thereof  who  shall  knowingly  have  voted 
for  or  directed  the  prohibited  act  is  liable  to  a  fine  of  $5,000  and 
imprisonment  in  jail  not  exceeding  one  year,  or  both,  in  the  dis- 
cretion of  the  court.  Any  person,  directly  or  indirectly,  doing  or 
attempting  to  do — 

"anything  to  prevent  anyone  from  bidding  or  shall  do  any 
act  to  prevent  free  and  fair  competition  among  the  bidders 
or  those  desiring  to  bid  shall  be  punished  as  prescribed  in 
this  section  [10]  in  the  case  of  an  officer  or  director." 

In  furtherance  of  the  supervision  of  this  procedure  in  bidding,  and 
the  enforcement  of  the  requirements  of  penalties  therein  pre- 
scribed, every  common  carrier  thus  circumstanced  is  required 


BANKS.  55 

within  30  days  to  file  with  the  Interstate  Commerce  Commission 
a  full  and  detailed  statement  of  the  transaction ;  and  if  after  in- 
vestigation or  hearing  the  Interstate  Commerce  Commission  shall 

"have  reason  to  believe  the  law  has  been  violated  in  and 
about  the  said  purchases  or  transactions  it  shall  transmit 
all  papers  and  documents  and  its  own  views  or  findings  to 
the  Attorney-General."  (Section  10.) 

Regulation  Demanded  in  Public  Interest. — No  doubt  the 
severity  which  exudes  from  the  statute  will  impress  some  per- 
sons as  extreme,  and  as  extending  the  punishment  beyond  the 
point  where  it  fits  the  crime.  Much  might  be  said  on  that  theme 
and  many  people  might  be  convinced ;  but  it  would  be  hardly  pos- 
sible to  retain  their  support  when  the  history  of  the  abuse  thereby 
sought  to  be  cured  was  laid  bare. 

Occasion  for  Such  Regulation  Stated. — The  public  is  the  ulti- 
mate paymaster  in  all  enterprises  conducted  by  a  common  carrier, 
and  any  waste  or  fictitious  items  of  expense  means  a  larger  ag- 
gregate sum  to  be  met.  Those  who  ride  upon  railroads,  for  in- 
stance, are  frequently  obliged  to  endure  discomforts  by  way  of 
ill-constructed  or  ill-cared-for  coaches,  antiquated  stations,  or  in- 
frequent trains;  whereas,  on  an  adjoining  system  extending 
through  a  similar  territory,  exactly  the  opposite  state  of  affairs 
will  prevail.  No  surface  reason  will  suggest  itself  why  such  a 
contrast  should  exist;  and  yet  the  difference  is  obvious  and  is  a 
well-known  feature  of  the  territory  which  each  or  both  supply. 
Upon  investigation,  however,  the  source  of  their  varying  fortunes 
will  in  most  cases  be  found  very  quickly.  In  the  first-mentioned 
class  the  most  frequent  cause  of  depression  is  exploitation  on  the 
part  of  the  original  promoters  or  disloyal  officers,  who  have  issued 
securities  without  due  regard  to  the  true  interests  of  the  system, 
being  moved  thereto  by  secret  profits  in  the  various  undertakings. 
In  the  other  instance,  the  fair  dealing  of  promoters  and  officers 
has  resulted  in  real  value  for  every  dollar  expended,  and  these 
results,  comforting  and  generally  satisfactory  alike  to  stock- 
holders and  the  public,  have  been  the  outcome  of  an  honest  pol- 
icy. Like  Hogarth's  prints,  no  words  are  required, — the  things 
speak  for  themselves.  Who  will  say,  after  reflecting  upon  such 
a  contrasting  spectacle  in  corporate  management,  that  the  public 
is  not  a  party  to  every  contract  made  by  or  on  behalf  of  a  common 


56  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

carrier  or  other  enterprise  engaged  in  public  service?  Even 
though  they  do  not  sign  the  instrument  or  add  their  seal  thereto, 
the  people  are  parties, — and  deeply  interested  parties, — since 
upon  them  will  fall  the  burden  of  meeting  the  upkeep  and  divi- 
dends, which  must  precede  and  accompany  really  efficient  serv- 
ice. It  is  no  wonder,  then,  that  safeguards  are  thrown  about  the 
fountain-heads  of  extravagant  or  corrupt  practices;  and  though 
late  in  the  day,  that  the  responsible  executive  heads  with  the 
board  of  directors  are  held  liable  for  transactions  that  savor  of 
unfairness  or  waste.  With  these  protective  and  reformative  fea- 
tures in  full  force  and  effect,  the  people  are  likely  in  future  to 
gain  the  advantage  of  the  increments  which  arise  from  their  em- 
ployment of  public  utilities.  At  the  very  least,  it  seems  probable 
that  unconscionable  "commissions"  and  "watered  stocks"  will  not 
figure  so  largely  in  future  as  in  the  past  in  the  business  affairs  of 
public  service  corporations ;  and  that  improved  facilities  together 
with  comforts,  conveniences  and  safety  appliances,  will  not  be 
deferred  until  the  exchequer  has  recovered  from  the  drain  occa- 
sioned by  the  outcome  of  false  or  faulty  methods  of  finance. 
While  it  might  with  some  degree  of  reasonableness  be  contended 
that  these  remarks  would  appear  more  appropriately  under  suc- 
ceeding chapters,  their  occurrence  as  an  explanation  why  officials 
of  public  utility  corporations  should  not  be  directly  or  indirectly 
concerned  in  the  profits  from  sales  of  securities  or  from  the  pur- 
chase of  supplies,  is  not  without  a  certain  logical  sequence  here. 
As  it  is,  the  foregoing  statement  without  doubt  presents  with 
substantial  correctness  the  intention  of  Congress  in  creating 
these  several  Commissions,  and  endowing  them  with  authority 
and  powers  commensurate  with  the  importance  of  the  tasks  before 
them.  If  its  presentation  here  will  have  served  a  useful  purpose, 
— that  is  all  the  justification  we  ask  or  expect. 

In  closing,  attention  is  again  called  to  the  fact  that  Section  10 
includes  within  its  scope  "dealings  in  securities" ;  hence,  bankers 
and  banking  institutions  are  or  may  be  directly  concerned. 


CHAPTER  VII. 

COMMON  CARRIERS:    REGULATIONS  CONTAINED 

IN: 

1.  Federal  Trade  Commission  Act. 

2.  Clayton  Law. 

x.  PROVISIONS  OF  THE  FEDERAL  TRADE  COMMISSION 
ACT. 

Banks  and  Common  Carriers  Generally  Excepted  from  Juris- 
diction.— As  in  the  case  of  banks,  ordinary  transactions  pertain- 
ing to  the  business  and  management  of  common  carriers  are  ex- 
pressly taken  out  of  the  jurisdiction  of  the  Federal  Trade  Com- 
mission, as  conferred  by  Section  5  of  said  law ;  and  they  are  also 
excepted  from  the  requirements  as  to  inspection  and  annual  or 
special  reports,  contained  in  Section  6.  These  exceptions  are  due 
to  no  favoritism  or  undue  advantage  accorded  to  financial  institu- 
tions, or  common  carriers ;  such  omission  is  merely  an  acknowl- 
edgment of  the  minute  inspection  and  detailed  reports  required  of 
these  two  branches  of  business  by  other  departments,  boards  or 
commissions.  In  brief,  it  may  have  been  thought  that  if  such  ex- 
actions were  duplicated,  no  time  would  be  left  to  run  trains  or  to 
make  bank-loans.  To  that  extent,  the  statute  is  merciful  to  the 
classes  of  corporations  concerned. 

Such  Exemptions  Strictly  Construed. — It  should  be  repeated, 
however,  here  as  elsewhere,  that  where  curative  statutes  are 
enacted  to  reach  and  obliterate  a  long-standing  abuse,  the  except- 
ing clauses  will  without  doubt  be  strictly  and  even  narrowly 
construed  by  the  Commission  and  by,  in  a  less  degree,  the  courts. 
This  principle  of  the  applications  of  such  specific  legislation  is 
due  to  human  nature  rather  than  to  any  recognized  rule  of  statu- 
tory construction.  Every  newly  created  member  of  the  govern- 
mental body  is  bound  to  justify  its  right  to  exist;  and  the  most 
obvious  means  at  command  is  for  it  to  assume  jurisdiction  in 
doubtful  or  border-line  cases.  Thus  Congress  has  often  found  in 
experience  that  it  has  builded  wider  if  not  better  than  it  knew. 
The  early  decisions  of  Chief  Justice  Marshall  are  replete  with 
holdings  that  widened  the  scope  of  the  powers  of  the  Supreme 
Court ;  and  while  it  was  no  doubt  to  the  advantage  of  the  country 

57 


58  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

at  large  that  there  should  be  no  twilight-zone  or  no-man's  land  in 
that  sphere  of  government,  still  the  fact  remains  that  the  history 
of  that  court  illustrates  the  human  tendency  of  institutions  to  re- 
tain or  enlarge  their  rights  and  influence,  when  their  own  voice 
is  potent  in  the  demarcation  of  their  powers.  Edmund  Burke 
said:  "The  speculative  line  of  demarcation,  where  obedience 
ought  to  end  and  resistance  must  begin,  is  faint,  obscure  and  not 
easily  definable,"  and  the  practical  line  in  legal  construction  is 
often  as  thin  and  hazy.  This  being  so,  the  omission  of  excepting 
clauses  will  without  question  be  construed  to  leave  the  business 
concerned  within  the  statute,  under  the  broad  definitions  of  cor- 
porations, etc.,  therein  contained.  Thus  where  a  bank  or  common 
carrier  goes  out  of  its  ordinary  and  special  field  and  enters  upon 
any  enterprise  that  involves  general  merchandising,  it  will  as  a 
matter  of  course  become  amenable  to  every  requirement  of  the 
Federal  Trade  Commission  Act,  and  of  the  Clayton  Law  as  well. 
Right  to  Inquire  and  Recommend,  in  Certain  Instances. — 
But  while  by  express  exception,  Section  6  of  the  first-named  law 
exempts  common  carriers  from  inspection  and  the  burden  of 
making  reports  to  that  body,  there  are  certain  requirements  that 
apply  to  common  carriers,  since  they  are  directed  to  "any  defend- 
ant corporation,"  or  "any  corporation."  These  requirements  are 
contained  in  subdivision  (c)  authorizing  the  Commission  to  in- 
vestigate the  manner  in  which  any  decree  is  being  carried  out,  in 
any  suit  brought  by  the  United  States  to  prevent  and  restrain  any 
violation  of  the  Anti-trust  acts;  subdivision  (d)  upon  the  direc- 
tion of  the  President  or  either  House  of  Congress  empowering 
the  Commission  to  investigate  and  report  the  facts  relating  to  any 
alleged  violations  of  the  Anti-trust  acts  by  any  corporation ;  sub- 
division (e)  upon  the  application  of  the  Attorney-General  like 
power  is  conferred  to  investigate  and  make  recommendations 
for  the  readjustment  of  the  business  of  any  corporation  alleged  to 
be  violating  the  Anti-trust  acts,  in  order  that  the  corporation  may 
thereafter  maintain  its  organization,  management  and  conduct  of 
business  in  accordance  with  law;  subdivision  (f)  whereby  the 
Commission  is  likewise  empowered  to  make  public  information 
thereby  secured,  in  its  discretion,  except  trade  secrets  and  names 
of  customers ;  make  annual  and  special  reports  to  the  Congress 
and  to  submit  therewith  recommendations  for  additional  legisla- 
tion and  to  provide  for  the  publication  of  its  reports  and  de- 


COMMON  CARRIERS.  59 

cisions;  subdivision  (g)  containing  the  important  power  from 
time  to  time  to  classify  corporations  and  make  rules  and  regula- 
tions for  the  purpose  of  carrying  out  the  provisions  of  the  Federal 
Trade  Commission  Act;  subdivision  (h)  establishing  a  new  field 
of  endeavor,  by  conferring  authority  to  investigate  from  time  to 
time,  trade  conditions  in  and  with  foreign  countries  where  asso- 
ciations, conditions  or  practices  of  manufacturers,  merchants  or 
traders  or  other  conditions  may  affect  the  foreign  trade  of  the 
United  States,  and  to  report  to  Congress  thereon,  with  such  rec- 
ommendations as  it  deems  advisable. 

The  above  provisions  have  been  inserted  at  length  and  prac- 
tically in  the  words  of  the  statute,  because  it  will  appear  upon  a 
general  view  thereof  that  there  are  conditions,  including  the  en- 
trance upon  matters  of  merchandising  where  the  regulations  of  the 
Federal  Trade  Commission  Act  would  apply.  The  right  to  in- 
vestigate alleged  infractions  of  the  Anti-trust  laws  and  to  enquire 
into  the  effectiveness  of  decrees  entered  in  actions  by  the  govern- 
ment to  enforce  the  provisions  thereof,  and  to  make  recommenda- 
tions as  to  the  readjustment  of  the  corporate  affairs  of  a  company 
charged  with  such  violations — are  all  phases  of  the  statute  that  do 
affect  common  carriers  along  with  other  incorporated  concerns. 
Whether  the  right  to  classify  corporations  under  subdivision  (g) 
relates  to  common  carriers,  or  not,  certainly  they  must,  so  far  as 
concerned,  conform  to  the  rules  and  regulations  which  the  Fed- 
eral Trade  Commission  thereby  is  empowered  to  make;  and  it 
may  be  that  steamship  trusts  and  special  rates,  singly  or  combined, 
upon  foreign  railroads  and  steamship  lines,  or  in  conjunction  with 
traffic  corporations  in  the  United  States,  would  make  the  terms  of 
subdivision  (h)  very  important  in  its  regulating  effect  upon  com- 
mon carriers,  and  make  its  influence  felt  abroad  as  well  as  within 
the  limits  of  the  United  States  and  its  dependencies. 

Debates  in  Congress  have  developed  a  disposition  to  regard  the 
Commission,  acting  under  subdivision  (h),  as  constituting  a  con- 
venient and  permanent  substitute  for  a  Tariff  Revisional  Commis- 
sion. What  effect  this  aspect  of  its  powers  will  produce  cannot  be 
estimated  in  advance ;  but  this  proposal  indicates  the  unusual  na- 
ture and  far-reaching  extent  of  the  jurisdiction  these  statutes  con- 
fer. 

The  right  to  compel  access  to  books  and  papers  is  conferred 
by  Section  g,  together  with  the  usual  power  to  subpoena  wit- 


6o  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

nesses;  and  by  Section  10  failure  to  attend  and  testify,  or  to 
produce  documentary  evidence  is  made  a  criminal  offense ;  also, 
the  mutilation  of  or  making  false  entries  in  corporate  papers  and 
records,  is  likewise  prohibited  under  penalty  of  fine  and  imprison- 
ment. To  secure  privacy,  acts  of  employees  resulting  in  unau- 
thorized publicity  are  penalized,  and  the  fine  of  $5,000  or  impris- 
onment for  not  exceeding  one  year,  or  in  the  discretion  of  the 
court,  the  imposition  of  both  said  imprisonment  and  fine,  indicate 
the  intent  of  the  statute  makers  that  Section  10  should  prevent 
unauthorized  disclosures  during  the  progress  of  investigations  of 
this  nature. 

Reverting  to  subdivision  (e)  which  confers  the  power  to  make 
recommendations  to  the  Attorney-General,  this  feature  seems  to 
supply  the  ounce  of  prevention  that  will  in  practice  obviate  pounds 
of  cure,  when  the  corporation  concerned  is  ready  to  shape  its 
course  to  the  law's  requirements  without  recourse  to  long  and 
expensive  litigation  to  determine  the  legal  status  of  its  acts.  In 
effect,  this  provision  may  do  much  to  occupy  the  place  of  the 
power  to  commend  which  was  advocated  by  persons  experienced 
in  corporate  management,  as  appears  in  the  reports  of  the  Con- 
gressional committees  and  the  discussions  connected  with  the  en- 
actment of  the  Trade  Commission  Act  and  the  Clayton  Law.  The 
right  to  "investigate  and  make  recommendations"  might  almost 
be  said  to  imply  the  power  to  "make  commendations." 

Power  to  Investigate  Foreign  Trade  Conditions. — Another 
point  should  not  be  passed  by  without  some  further  consideration. 
Under  subdivision  (h)  of  Section  6  the  right  to  investigate  for- 
eign conditions  is  made  a  feature  of  the  Federal  Trade  Commis- 
sion's powers.  Such  investigation  might  likely  enough  disclose 
combinations  by  state-owned  railroads  and  steamship  lines  oper- 
ating under  governmental  control,  wherein  and  whereby  ship- 
ping of  goods  is  permitted  at  such  nominal  traffic  rates  as  to 
seriously  handicap  our  public  service  corporations  of  similar  kinds 
in  maintaining  competition  upon  anything  resembling  a  fair  basis 
of  transportation  cost.  In  that  event,  it  would  appear  equitable 
and  right  to  mitigate  or  temporarily  remove  altogether  the  re- 
strictions of  the  Anti-trust  statutes  so  far  as  they  affect  the  articles 
of  trade  concerned  by  those  practices,  in  foreign  commerce. 
These  are  considerations  which  will  arise  from  time  to  time,  when 
the  condition  of  our  foreign  trade  is  productive  of  situations  such 


COMMON  CARRIERS.  61 

as  are  referred  to  above.  As  we  have  seen,  the  requirements  of 
Section  5,  regulating  "unfair  methods  of  competition  in  com- 
merce" do  not  apply  to  common  carriers,  since  they  are  specifically 
excepted  therefrom.  Likewise  they  are  not  liable  to  be  investigated 
and  common  carriers  are  not  compelled  to  file  reports  under  the 
general  provisions  of  Section  6.  This  exemption  however,  would 
not  extend  to  matters  of  business  outside  of  the  right  to  conduct 
railroads,  pipe  lines,  telephone,  or  telegraph  systems,  and  similar 
auxiliary  enterprises.  Upon  the  whole,  the  provisions  of  the  Fed- 
eral Trade  Commission  Act  cannot  be  said  to  be  burdensome  to 
common  carriers.  When  construed  in  a  spirit  of  friendly  con- 
sideration,— as  we  have  every  reason  to  believe  is  and  will  be  the 
constant  attitude  of  the  Commission, — the  law  will  prove  a  shield 
to  protect  common  carriers  from  needless  interference  and  litiga- 
tion ;  in  brief,  it  guarantees  them  "equality  under  the  law." 

2.  PROVISIONS  OF  THE  CLAYTON  LAW. 

Certain  Common  Carrier  Provisions  Apparently  Unrelated. 
— Although  certain  of  the  provisions  affecting  common  carriers 
appear  quite  unrelated  in  the  two  statutes,  it  seems  proper  and 
necessary  to  collate  and  discuss  them  in  one  chapter,  where  the 
points  of  similarity  and  divergence  can  best  be  noted  and  com- 
pared as  they  occur  in  the  text  of  the  several  statutes. 

Extent  to  Which  Law  Applies. — It  is  possible  that  Section  2, 
relating  to  price  discrimination,  and  Section  3,  prohibiting  "tying" 
agreements,  do  not  relate  to  common  carriers  in  so  far  as  those 
corporations  confine  their  transactions  to  normal  operations  with- 
in the  scope  of  their  business ;  indeed,  such  outside  lines  of  busi- 
ness are  pro  tanto  forbidden  by  the  Act  to  Regulate  Commerce, 
as  amended,  Section  i,1  which  prohibits  any  common  carrier  from 
transporting  any  article  or  commodity  manufactured,  mined  or 
produced  by  it  or  under  its  authority,  or  in  which  it  may  have  any 
interest,  except  those  intended  for  its  use  in  its  transportation 
business,  and  further  excepting  timber  and  products  manufac- 
tured therefrom.  Doubtless  the  number  and  extent  of  the  land 
grants  bestowed  upon  railroads  to  encourage  construction  made 
it  unjust  to  interfere  with  their  ability  to  cut  and  market  lumber 
derived  from  their  own  domains. 

There  are,  moreover,  types  of  common  carriers  that  are  not 

i  See  Appendix  O,  pages  345-361,  for  original  Act,  with  amendatory 
laws  cited. 


62  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

enumerated  among  the  list  set  forth  in  the  amended  Act  to  Reg- 
ulate Commerce,2  as  subject  thereto,  and  as  to  those,  it  might  be 
held  that  they  are  subject  to  the  provisions  of  the  Clayton  Bill. 
Indeed,  no  convincing  reason  appears  why  non-enumerated  com- 
mon carriers  should  not  be  regarded  as  concerns  engaged  in  com- 
mercial pursuits. 

In  so  far  as  common  carrier  corporations  come  within  Section 
2  (price  discrimination),  Section  3  (tying  contracts),  or  are  con- 
cerned with  the  enforcement  of  Section  7  (stock  ownership  in 
competing  corporations),  and  Section  8  (interlocking  director- 
ates), the  jurisdiction  to  enforce  those  provisions  is  vested  in  the 
Interstate  Commerce  Commission  and  not  in  the  body  created  by 
the  Federal  Trade  Commission  Act.  It  is  so  enacted  by  Section 
1 1  of  the  Clayton  Law  and  the  term  there  employed  is  very  broad. 
No  qualification  whatever  is  used;  "common  carriers"  are  the 
words  employed  in  the  clause  giving  authority  to  the  Interstate 
Commission  to  enforce  compliance  with  Sections  2,  3,  7,  and  8 
of  the  Clayton  Law.  Under  this  broad  characterization  of  the  cor- 
porations affected  thereby,  all  common  law  common  carriers  may 
be  affected  by  these  four  sections  even  though  they  are  not  other- 
wise subject  to  the  jurisdiction  of  the  Interstate  Commerce  Com- 
mission. The  fact  that  Section  2,  price  discrimination,  and 
Section  3,  tying  contracts,  are  here  mentioned,  tends  to  confirm 
the  belief  elsewhere  expressed  that  under  some  circumstances 
common  carriers  are  subject  to  those  provisions  as  well  as  to  the 
regulations  contained  in  Section  7,  stock  ownership  in  competing 
corporations,  and  Section  8,  interlocking  directorates. 

Methods  of  Enforcement  Compared. — The  manner  of  en- 
forcement of  Sections  2,  3,  7,  and  8  of  the  Clayton  Law  is  fully 
provided  in  Section  n,  and  the  provisions  are  tantamount  to  the 
procedure  laid  down  in  Section  5  of  the  Federal  Trade  Commis- 
sion Act  for  carrying  out  of  the  prohibition  of  "unfair  methods 
of  competition  in  commerce."  Upon  consulting  the  statutory  re- 
quirements it  will  be  seen  that  the  Interstate  Commerce  Commis- 
sion is  constituted  the  tribunal  before  which  the  matter  must  be 
presented  in  the  place  of  the  Federal  Commerce  Commission,  in 
any  case  where  a  complaint  is  lodged  against  a  common  carrier. 
This  fact  should  be  borne  in  mind,  as  otherwise  confusion  might 
not  unnaturally  arise  from  the  requirement  that  Sections  2,  3,  7, 

2  See  note  i,  page  61,  supra. 


COMMON  CARRIERS.  63 

and  8  are  enforcible  before  the  Interstate  Commerce  Commission 
and  not  before  the  Federal  Trade  Commission, — which  in  other 
respects  is  the  companion,  guardian  and  complement  of  the  Clay- 
ton Law.  One  other  like  exception  to  the  general  rule  occurs  in 
that  infractions  of  these  sections  by  banks  are  made  triable  before 
the  Federal  Reserve  Board.3 

It  is  not  specifically  stated  that  the  Commerce  Commission  or 
the  Board  shall  have  at  its  command  the  machinery  for  the  service 
of  process,  etc.,  expressly  provided  in  the  Trade  Commission  Act ; 
but  the  powers  essential  to  make  the  Clayton  Law  provisions  ef- 
fective will  no  doubt  be  implied,  when  those  provisions  are  con- 
strued by  the  courts. 

Ownership  of  Stock  in  Competing  Corporation  Regulated. — 
Returning  to  the  provisions  of  the  Clayton  Law  as  they  affect 
common  carriers,  Section  7  expressly  forbids  the  destruction  of 
competition  by  means  of  stock  ownership  by  one  corporation  in  a 
competing  corporation ;  or  by  one  "holding  company"  in  two  or 
more  corporations  which  compete  among  themselves.  There  can 
be  no  doubt  that  this  section  applies  to  common  carriers.  The 
section  expressly  states  that  its  provisions  do  not  prevent  the 
ownership  of  stock  for  investment  purposes  and  not  to  secure  the 
voting  power;  nor  do  those  provisions  prohibit  the  creation  of 
subsidiary  corporations  and  the  partial  or  entire  ownership  of  the 
stock  thereof,  where  competition  is  not  substantially  lessened 
thereby.  Such  minor  corporation,  however,  must  be  formed  only 
to  carry  on  the  immediate  lawful  business  of  the  parent  company ; 
or  must  constitute  a  natural  and  legitimate  branch  or  extension 
thereof. 

Section  7  also  provides  in  substance  that  "any  common  carrier 
subject  to  the  laws  to  regulate  commerce"  may  similarly  build,  aid 
in  building,  or  own  by  stock-control  one  or  more  branch  or  short 
lines ;  and  the  Section  further  permits  the  parent  company  to  ex- 
tend any  of  its  lines  "through  the  medium  of  the  acquisition  of 
stock  or  otherwise  of  any  other  and  common  carrier"  where  there 
is  no  substantial  competition.  There  is  some  uncertainty  in  the 

3  Particulars  of  the  practice  in  filing  complaints,  etc.,  are  set  forth 
in  Chapter  III,  Federal  Trade  Commission's  Functions,  pages  24-27; 
Chapter  V,  Provisions  for  Enforcement,  pages  39,  40.  To  avoid  repetition, 
reference  is  made  to  those  chapters  for  further  information  on  these 
points;  see  also,  Rules  and  Forms. 


64  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

statute  as  to  whether  the  provision  conferring  right  to  form  sub- 
sidiary corporations  relates  to  common  carriers,  though  it  seems 
probable  the  language  will  be  construed  to  that  effect.  Such  a 
privilege  would  be  useful  in  many  ways,  and  when  exercised 
under  the  scrutiny  of  the  Interstate  Commerce  Commission  as 
provided  in  Sections  10  and  n,  it  seems  highly  improbable  any 
harm  can  ensue.  The  Clayton  Law  expressly  refers  to  common 
carriers  in  the  paragraph  relating  to  the  construction  or  acquisi- 
tion of  branch  or  short  lines,  so  the  uncertainty  mentioned  above 
does  not  extend  to  that  very  important  right.  Indeed,  every  trans- 
portation company  and  many  public  service  corporations  would  be 
seriously  hindered  if  not  altogether  stunted  in  their  growth,  if 
shorn  of  the  right  to  expand  as  new  business  opportunities  oc- 
curred in  regular  course. 

Meaning  and  Scope  Defined. — The  technical  expression  grant- 
ing this  privilege  to  "any  common  carrier  subject  to  the  laws  to 
regulate  commerce"  requires  some  explanation  to  define  its  exact 
meaning  and  scope.  The  reference  is  to  the  text  of  the  Interstate 
Commerce  Act  as  amended  June  29,  1906,*  where  by  specific  pro- 
visions the  original  jurisdiction  over  railways  acquired  by  the  Act 
of  1887  is  extended  to  pipe  lines  and  express  companies.  Tele- 
graph and  telephone  companies  are  also  included  by  later  amend- 
ment. Accordingly,  each  and  all  these  classes  of  corporations  can 
avail  themselves  of  this  right  to  extend  their  systems,  under  the 
conditions  already  mentioned.  In  brief,  the  words  "common  car- 
rier" no  longer  signify  railroads  alone;  the  term  has  become 
modernized  and  broadened  into  an  expression  which  includes  al- 
most every  company  that  affords  transportation  facilities  of  a 
public  nature. 

The  provisions  of  Section  8  relate  to  interlocking  directorates 
in  so  far  as  they  include  dealings  between  two  common  carriers ; 
while  similar  dealings  between  corporations,  one  or  more  of 
which  supply  securities  or  articles  of  commerce,  are  regulated  by 
corresponding  rules  set  forth  in  Section  10,  to  which  reference  is 
made  for  the  purposes  of  the  following  remarks.  While  this 
topic  has  been  discussed  at  considerable  length  in  Chapter  IV, 
under  the  general  heading  "Prohibitions  under  the  Clayton  Law," 
it  does  not  follow  that  further  comments  will  not  be  of  service 
here,  or  that  we  will  not  be  justified  in  again  inquiring  into  the 

4  See  note  i,  page  61,  supra. 


COMMON  CARRIERS.  65 

general  nature  of  those  regulations  and  rules  and  studying  their 
probable  efficacy  in  combating  the  very  real  abuse  they  are  in- 
tended to  overcome. 

Purpose  of  Provisions  Discussed. — Without  engaging  in  per- 
sonalities or  charging  individuals  with  responsibilities  for  acts 
which  were  customary  among  their  business  associates  of  former 
days,  the  fact  remains  that  very  many  large  fortunes  were  ac- 
cumulated in  a  brief  period  by  high  officials  of  the  principal  rail- 
road companies.  Some  portion  of  this  increment,  earned  or  un- 
earned, was  no  doubt  secured  through  stock  market  manipulation, 
while  opportunities  in  picking  out  choice  tracts  of  real  estate 
where  town  sites  and  machine  shops  would  quadruple  the  invest- 
ment, were  no  doubt  instrumental  in  swelling  the  flood  of  dollars 
flowing  into  private  bank  accounts.  These  sources  of  wealth 
were  somewhat  easy  of  concealment  through  the  use  of  deeds  to 
third  parties,  dummy  brokers'  accounts  and  other  familiar  meth- 
ods which  even  though  ferreted  out,  might  be  claimed  to  be  the 
result  of  activity  and  business  acumen.  In  the  matter  of  stock 
dealings  it  has  been  suggested  that  a  sworn  statement  of  such 
transactions  attached  to  the  annual  report  might  check  the  de- 
sire of  executive  officers  to  speculate  in  the  shares  of  corporations 
they  were  employed  to  superintend;  certainly  "bear  campaigns" 
in  which  the  officers  profited  by  the  misfortunes  of  the  company 
would  not  inspire  confidence  when  spread  upon  the  yearly  record. 
The  principal  Canadian  railway  has  made  public  announcement 
that  the  persons  selected  to  compose  its  managing  board  are  re- 
quired to  forego  speculating  in  its  shares,  and  that  this  standard 
has  been  steadfastly  maintained.  Be  that  as  it  may,  the  law  has 
not  taken  cognizance  of  these  doings ;  and  it  will  perhaps  be  left 
for  the  conscience  of  the  business  world  to  frame  a  code  of  ethics 
that  will  cover  such  situations,  when  more  conservative  ideas  and 
ideals  prevail. 

There  is  a  source  of  accumulation  by  officers,  however,  which 
the  lawmakers  determined  to  eliminate  without  more  delay.  The 
evils  of  the  holding  company  to  a  large  extent  evaporated  with  the 
decision  in  the  Northern  Securities  case;  it  remained  for  Con- 
gress to  proceed  a  step  further  in  the  direction  indicated  in  that 
far-reaching  decision  of  the  Supreme  Court. 

Dealings  With  Supply,  Construction  and  Financial  Con- 
cerns Regulated. — This  legislation  concerns  the  favored  con- 
5 


66  MANUAL  OE  FEDERAL  TRADE  COMMISSION. 

tractor  plan,  whereby  the  officers  of  the  purchasing  company  made 
contracts  for  funds  and  supplies  from  banks  and  manufacturing 
concerns  which  they  controlled  and  practically  owned.  The  result 
was  the  complete  destruction  of  anything  resembling  competition, 
and  this  in  turn  entailed  advances  in  price,  with  a  corresponding 
excessive  profit  to  the  parties  in  command  of  the  situation.  Section 
8  provides  that  after  two  years  from  the  passage  of  this  law,  to 
wit,  from  October  15,  1916, — no  person  shall  at  the  same  time 
hold  the  office  of  director  in  two  corporations,  where  the  elimina- 
tion of  competition  by  agreement  between  them  would  constitute 
a  violation  of  any  of  the  Anti-trust  laws.  While  the  statute  pro- 
vides that  this  provision  shall  not  apply  to  those  "common  car- 
riers subject  to  the  Act  to  Regulate  Commerce,  approved  Febru- 
ary 4,  1887,"*  it  should  be  carefully  noted  that  the  act  thus  spe- 
cifically named  relates  solely  to  railroads.  This  statute  was  the 
original  act  to  regulate  commerce,  and  the  inclusion  of  express 
and  sleeping-car  companies,  pipe  lines,  etc.,  thereunder  was  the 
outcome  of  later  amendment. 

The  purpose  to  exempt  only  railroads  from  the  prohibition  of 
interlocking  directorates  is  shown  even  more  conclusively  by  the 
fact  that  in  other  places  where  the  word  "common  carrier"  is  em- 
ployed in  the  Clayton  Law  to  signify  the  enlarged  list  of  transpor- 
tation companies,  the  language  is  quite  different.  Thus,  at  Sec- 
tion 7,  paragraph  4,  the  common  carriers  there  referred  to  are 
stated  to  be  those  "subject  to  the  laws  to  regulate  commerce" ;  at 
Section  9,  paragraph  I,  they  are  described  as  "every  *  *  * 
corporation  engaged  in  commerce  as  a  common  carrier";  while 
at  still  another  place  Section  10,  paragraph  I,  the  expression  is 
"common  carrier  engaged  in  commerce."  It  is  submitted,  there- 
fore, that  in  view  of  the  language  employed  in  Section  8,  as  above 
noted,  the  conclusion  is  natural  that  the  prohibition  against  inter- 
locking directorates  is  in  full  force  and  effect  as  to  every  class  of 
common  carriers  engaged  in  interstate  commerce,  with  the  single 
exception  of  railway  corporations. 

This  provision  of  Section  8  was  not  considered  requisite  to  the 
proper  conducting  of  corporations  of  small  or  moderate  dimen- 
sions ;  at  least  the  prohibition  is  made  to  apply  only  to  companies 
with  aggregate  assets  exceeding  one  million  dollars  of  actual 
capital. 

5  See  original  powers  set  forth  in  Appendix  O,  pages  345-361. 


COMMON  CARRIERS.  67 

Our  remarks  upon  interlocking  directorates,  Section  8,  are  as 
fully  applicable  and  perhaps  will  appear  even  more  pertinent  to 
Section  10.  In  fact,  Section  10  enters  directly  into  the  preventive 
plan  directed  against  secret  and  indirect  profits  in  dealings  by 
corporations  engaged  in  public  transportation,  and  condemns  and 
interdicts  such  practices  where  the  transactions  amount  to  more 
than  $50,000  in  any  one  year. 

New  Method  of  Regulation  Prescribed  by  Section  10. — The 
statute  contemplates  a  new  angle  of  attack  upon  an  old  evil,  and 
whatever  we  think  of  its  potential  force,  and  independently  of 
whether  we  agree  with  the  scheme  of  the  legislative  campaign, 
still  the  effort  is  interesting  in  itself  as  a  study  in  law-making. 
The  language  of  this  Clayton  Law  provision  is  too  compact  to 
admit  of  further  condensation,  and  we  accordingly  present  the 
passage  in  question: 

"Sec.  10,  par.  i,  That  after  two  years  from  the  approval 
of  this  act  [i.  e.,  after  October  15,  1916]  no  common  car- 
rier engaged  in  commerce  shall  have  any  dealings  in  se- 
curities, supplies  or  other  articles  of  commerce,  or  shall 
make  or  have  any  contracts  for  construction  or  mainte- 
nance of  any  kind,  to  the  amount  of  more  than  $50,000  in 
the  aggregate,  in  any  one  year,  with  another  corporation, 
firm,  partnership  or  association  when  the  said  common 
carrier  shall  have  upon  its  board  of  directors  or  as  its  pres- 
ident, manager,  or  as  its  purchasing  or  selling  officer,  or 
agent  in  the  particular  transaction,  any  person  who  is  at 
the  same  time  a  director,  manager,  or  purchasing  or  sell- 
ing officer  of,  or  who  has  any  substantial  interest  in,  such 
other  corporation,  firm,  partnership,  or  association,  unless 
and  except  such  purchases  shall  be  made  from,  or  such 
dealings  shall  be  with,  the  bidder  whose  bid  is  the  most 
favorable  to  such  common  carrier,  to  be  ascertained  by 
competitive  bidding  under  regulations  to  be  prescribed  by 
rule  or  otherwise  by  the  Interstate  Commerce  Commission. 
No  bid  shall  be  received  unless  the  name  and  address  of 
the  bidder  or  the  names  and  addresses  of  the  officers,  di- 
rectors and  general  managers  thereof,  if  the  bidder  be  a 
corporation,  or  of  the  members,  if  it  be  a  partnership  or 
firm,  be  given  with  the  bid." 


68  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

Then  follows  a  provision  that  any  person  aiding  or  abetting  in 
such  dealings  otherwise  than  as  above  prescribed  shall  be  subject 
to  the  same  penalties  fixed  for  violations  of  this  prohibition  on 
the  part  of  the  officers,  directors  or  agents. 

The  seriousness  of  the  violations  of  the  statute  may  be  meas- 
ured by  the  fact  that  the  common  carrier  is  subjected  to  a  fine 
of  $25,000;  while  the  officers,  directors,  and  agents  shall  be 
deemed  guilty  of  a  misdemeanor,  carrying  with  it  individual  fines 
up  to  $5,000,  and  imprisonment  in  jail  not  exceeding  one  year, 
or  both,  in  the  discretion  of  the  court. 

The  liability  to  personal  punishment  incurred  on  the  part  of  the 
offending  officers,  directors  and  agents  marks  a  course  as  log- 
ical as  it  is  severe.  Former  enactments  whereby  the  incorporated 
body  which  had  already  suffered  by  the  depletion  of  its  exchequer 
because  of  secret  profits  and  swollen  commissions,  was  forced  to 
endure  a  further  loss  by  means  of  a  fine,  did  not  and  could  not 
appeal  to  the  good  sense  of  judges,  jurors  or  the  general  public. 
Fines  of  this  description  in  the  ultimate  result  fell  upon  the  share- 
holders, whose  assets  were  reduced  or  whose  dividends  were  cut 
down,  to  meet  the  payment  of  the  fine,  in  addition  to  the  expenses 
of  the  litigation.  The  injustice  is  apparent  when  it  is  realized  that 
most  of  these  acts  originated  in  the  inner  official  circles  and  were 
concealed  from  the  stockholders. 

Under  the  new  regime  of  corporate  scrutiny  and  control  these 
leakages  in  corporate  finances  should  be  curtailed;  and  may  at 
length  be  stopped  at  their  source.  Certainly,  the  provisions  of 
Sections  8  and  10  comprise  an  earnest  and  intelligent  effort  by 
Congress  to  provide  adequate  measures  to  accomplish  this  long- 
called-for  reform. 

At  the  conclusion  of  any  business  dealings  within  the  scope  of 
Section  10,  the  common  carrier  is  required  to  file  with  the  Inter- 
state Commerce  Commission  a  full  and  detailed  statement  of  the 
transaction.  If  that  body  after  investigation  or  hearing,  finds 
that  there  is  reason  to  believe  the  law  has  been  violated  in  or 
about  those  particular  purchases  or  transactions,  the  board  of 
commissioners  shall  transmit  all  papers  and  documents  and  its 
own  views  or  findings  regarding  the  transaction,  to  the  Attorney- 
General.6 

It  cannot  be  denied  that  there  is  a  certain  grimness  in  the  ab- 
sence of  direct  reference  to  the  criminal  prosecutions  which  under 
circumstances  indicative  of  guilt  would  be  sure  to  follow.  In  no 

6  See  Chapter  XII,  Criminal  Provisions,  pages  n8-i42. 


COMMON  CARRIERS.  69 

instance  in  corporation  law,  however,  can  the  terrors  of  the  law  to 
evildoers  be  more  usefully  employed  than  in  overcoming  the 
practices  aimed  at.  Inside  influences  and  special  interests  have 
for  years,  yes,  decades,  been  potent  in  and  about  the  financing, 
equipping  and  management  in  general  of  common  carriers  and  the 
other  classes  of  the  larger  corporations  engaged  in  public  trans- 
portation and  service.  These  special  interests  will  see  nothing 
except  interference  and  unwarranted  assumption  of  power  in 
these  restrictive  Anti-trust  laws.  To  do  less  would  be  more  than 
human,  and  whatever  comment  has  been  made  upon  those  inter- 
ests and  corporate  influences,  no  one  conversant  with  their  his- 
tory and  methods  has  ever  denied  that  the  individuals  concerned 
were  extremely  human.  Sources  of  wealth  will  be  dried  up  and 
many  officials  and  agents  will  find  it  an  irksome  task  to  confine 
their  outgo  to  their  stated  salaries  and  regular  commissions.  That 
there  will  be  indignant  protests  must  be  expected,  and  no  doubt 
these  will  occur  in  full  measure. 

But  the  public  at  large  is  certain  to  benefit, — and  that  is  surely 
the  ultimate  object  of  legislation  in  a  free  republic.  Improve- 
ments in  public  conveyances,  reduced  rates  in  communications  by 
telegraph  and  telephone,  equal  or  enhanced  returns  to  investors — 
these  are  results  far  more  desirable  than  "the  thrift  that  follows 
fawning."  Without  fear  of  contradiction  it  may  be  said  that 
the  deterrent  effects  of  the  Anti-trust  laws  alone  are  worth  many 
times  the  cost  of  the  public  managing  boards  which  have  been 
created;  in  fact,  insistence  that  unearned  increments  shall  cease 
and  those  sources  of  revenue  shall  be  restored  to  the  coffers  of 
transportation  companies  marks  a  new  era  in  the  management  of 
corporate  affairs. 

Enforcement  of  Section  10  Committed  to  Commerce 
Commission. — In  concluding  these  references  to  the  regulations 
prescribed  by  Section  10  for  the  guidance  of  common  carriers 
with  common  or  interlocking  members  upon  the  boards  of  direc- 
tors of  construction,  supply  or  financial  concerns,  we  desire  to 
call  attention  to  the  fact  that  enforcement  thereof  rests  with  the 
Interstate  Commerce  Commission.  This  jurisdiction  is  in  addi- 
tion to  the  provision  of  Section  n,  which  relegates  to  the 
Interstate  Commerce  Commission  and  Federal  Reserve  Board 
respectively  the  authority  to  enforce  Sections  2,  3,  7,  and  8  of 
the  Clayton  Law,  in  so  far  as  they  relate  to  transactions  by  com- 
mon carriers  and  banks. 


CHAPTER  VIII. 

THE  SHERMAN  ANTI-TRUST  LAW;  ITS  ORIGIN, 
HISTORY  AND  THE  LEADING  CASES  THERE- 
UNDER CONSIDERED.1 

1.  Comprehensive  Language  Employed. 

2.  Unlike  Constitution, — Kramers  Did  Not  Expound  Law. 

3.  Principles  and  Development. 

4.  Occasion  for  Statutory  Relief. 

5.  Various  Drafts  of  Measure  Considered. 

6.  Supporting  Argument  in  Senate. 

7.  Tentative  Measures  Considered. 

8.  Scope  and  Effect  of  Law  as  Enacted. 

9.  Constitutional  Questions  Settled  by  Supreme  Court. 
10.  Benefits  from  Anti-trust  Act. 

n.  Foreign  Anti-trust  Laws  Discussed. 

12.  Commission  Law  and  Clayton  Law  Broaden  Means  of  Relief. 

13.  Narrowing  Argument  Examined. 

14.  Definitions  of  "Commerce." 

15.  Congress  Supplements  Anti-trust  Decisions. 

i.  COMPREHENSIVE  LANGUAGE  EMPLOYED. 

Language  of  Statute  Very  Comprehensive. — The  Sherman 
Law,  when  it  received  the  approval  of  President  Harrison  in  1890, 
closely  resembled  the  Constitution  of  the  United  States  when  it 
was  framed  in  1787,  in  that  the  enactment  was  couched  in  t^rse, 
general  and  comprehensive  language,  calling  for  construction  and 
application  in  numerous  diversified  cases  to  insure  the  incorpora- 
tion thereof  into  the  great  and  generally  recognized  body  of  stat- 
utory provisions  seasoned  by  court  rulings,  which  taken  together 
constitute  the  law  of  the  land. 

Early  Application  of  Constitution  and  Sherman  Law  Com- 
pared.— Very  fortunately  for  the  early  development  of  our  Fed- 
eral government,  the  statesmen  who  framed  the  Constitution  of 
the  United  States  did  not  permit  their  interest  to  cease  at  its 
birth,  but  continued  their  ministrations  through  a  series  of  years. 
While  realizing  that  judicial  development  and  application  would 
continue  into  remote  periods,  they  also  understood  that  the  most 
precarious  stage  would  be  when  it  was  necessary  to  apply  re- 

I  For  text  of  Sherman  Law,  see  Appendix  C,  pages  279-281,  post. 

70 


SHERMAN  ANTI-TRUST  LAW.  71 

straints  or  enforce  positive  requirements  upon  the  original  States 
which  had  until  a  then  recent  time  acted  as  colonies  independent 
of  all  restraint  which  was  not  exercised  from  a  central  govern- 
ment sometimes  lenient  and  often  forgetful  of  everything  that 
did  not  directly  concern  English  trade  or  interests. 

2.  UNLIKE    CONSTITUTION— FRAMERS    DID    NOT   EX- 
POUND LAW. 

Principles  of  Constitution  Explained  by  Its  Framers. — This 
patriotic  duty  led  the  "fathers  of  the  Constitution"  to  set  forth 
their  understanding  of  its  meaning  and  practical  workings  in  those 
able  papers  which  when  collected  were  known  as  the  "Federal- 
ist" ;  and  our  obligations  to  Hamilton  and  Madison  and  Jay  are 
largely  enhanced  by  their  voluntary  act. 

No  Similar  Interpretation  of  Sherman  Law  Exists. — Unfor- 
tunately, no  publications  of  a  similar  nature  and  authority  ac- 
companied the  enactment  of  the  Sherman  Law;  and  it  may  be 
for  that  reason  the  statute  for  a  time  was  not  rigidly  enforced  or 
at  least  was  applied  in  an  ineffectual  way ;  and  it  may  also  have 
resulted  from  the  same  cause  that  only  in  matters  of  great  mo- 
ment has  it  been  utilized,  for,  like  impeachment  for  high  treason, 
only  formidable  offenders  have  been  thought  worthy  of  a  prose- 
cution which  arose  in  effect  to  the  dignity  of  a  state  trial. 

Absence  of  Exposition  Delayed  Enforcement. — Had  such 
an  authoritative  explanation  followed  the  enactment  of  this  epoch- 
making  statute,  and  had  the  law  itself  contained  a  provision 
whereby  the  injured  citizen  could  register  his  complaint  and  and 
be  heard  without  the  intermediation  of  government  functionaries, 
the  era  of  delay,  uncertainty  and  difficulties  that  has  beset  its  en- 
forcement might  have  been  obviated,  and  a  whole  generation  of 
predatory  trusts  and  monopolies  might  have  perished  unborn. 

3.  PRINCIPLES  AND  DEVELOPMENT. 

Development  of  Sherman  Law  Described. — Perhaps  it  is 
not  too  late  in  this  connection  to  describe  the  genesis  and  de- 
velopment of  this  law,  even  though  with  the  advent  of  the 
Clayton  Law,  and  its  enabling  act,  the  Federal  Trade  Commis- 
sion Law,  some  measure  of  the  immediate  necessity  for  and 
importance  of  the  broad  and  sweeping  denunciations  of  the  Sher- 
man Law  may  have  passed  out  of  our  system  of  jurisprudence. 


72  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

Authoritative  explanations  of  its  terms  will  be  found  scattered 
through  the  debates  in  Congress  preceding  its  passage.  These 
opinions  are  useful,  especially  when  considered  in  connection  with 
the  exigencies  from  which  the  statute  arose.2 

The  public  life  of  John  Sherman — originator  and  sponsor  of 
this  law — was  particularly  distinguished.  Beginning  as  a  member 
of  Congress  in  1855,  his  public  career  occupied  forty-three  years 
to  the  date  of  his  retirement  from  the  office  of  Secretary  of  State 
in  1898.  His  record  of  public  service  in  the  Senate  includes  two 
periods  of  sixteen  years  each,  interrupted  by  four  years  of  incum- 
bency of  the  Secretaryship  of  the  Treasury  under  President 
Hayes,  at  which  time  resumption  of  specie  payment  was  carried 
into  effect  at  his  instance  and  under  his  direction.  During  the 
whole  of  those  thirty-two  years  of  service  in  the  Senate  this  recog- 
nized authority  on  monetary  subjects  was  a  member  of  the  Com- 
mittee on  Finance,  and  during  numerous  years  officiated  as  its 
chairman. 

General  Principles  Involved. — Ever  since  and  before  the  deci- 
sion of  the  earliest  reported  Anti-trust  case,3  decided  in  1602,  there 
has  existed  an  ingrained  opposition  to  monopolies  and  trade- 
restraining  agreements,  which  has  grown  into  one  of  the  charac- 
teristic features  of  the  Anglo-Saxon  race. 

This  feeling  was  and  is  born  of  an  innate  sense  of  the  principles 
that  enter  into  successful  self-government  by  freemen,  and  is 
founded  upon  the  realization  of  the  dual  results  that  flow  from 
such  centralization  of  trade.  These  results  are : 

First,  the  impairment  of  the  efficiency  of  the  citizen,  with  the 
risk  that  he  will  be  reduced  to  poverty  and  made  an  object  of 
charity  and  an  expense  to  the  community ; 

Second,  the  enhancement  of  price,  which  results  naturally  and 
almost  necessarily  in  the  centralized  commodity,  which  in  turn, 
seriously  affects  the  cost  of  living  and  is  a  matter  that  concerns 
adversely  every  individual  except  the  owner  of  the  right  to  mo- 
nopolize. 

4.  OCCASION  FOR  STATUTORY  RELIEF. 

Centralization  of  Business  Recognized  and  Regulated. — In 
the  years  1889  and  1890,  a  rising  storm  of  indignation  and  pro- 

2  For  able  discussion  of  the  principles  and  attendant  circumstances  of 
this  enactment,  see  Report  of  Senate  Committee,  Appendix  M,  pages  304- 
334.    For  tentative  forms  of  measure,  see  Appendix  K,  pages  297-301. 

3  Darcy  v.  Allen,  11  Coke  84;  see  7  Harvard  Law  Review,  p.  324, 


SHERMAN  ANTI-TRUST  LAW.  73 

test  was  evident  throughout  the  United  States.  Unrestricted  com- 
petition had  ceased  to  work  out  equality  in  service,  or  price,  or  of 
opportunity  for  the  average  citizen  to  pursue  his  accustomed  call- 
ing,— at  least  in  numerous  departments  of  trade.  Vast  combina- 
tions of  originally  independent  interests  had  placed  it  within  the 
power  of  a  comparatively  small  number  of  magnates  or  "captains 
of  industry,"  to  fence  in  areas  of  trade  activity,  and  to  make  them 
exclusively  their  own.  Particular  attention  was  devoted  to  ac- 
quiring control  of  railroads  (often  richly  endowed  with  public 
lands),  and  when  secured,  such  control  was  misused  to  harass 
and  destroy  neighboring  roads  and  competing  water  routes  by 
favoring  rates  which  were  given  to  large  patrons,  usually  those 
identical  trusts.  Those  interests  sought  and  obtained  seats  upon 
the  boards  of  directors  where  the  main  contention  became  not  the 
prosperity  of  the  common  carrier,  but  the  exchange  of  special 
privileges. 

The  Standard  Oil  Company  was  reputed  to  be  the  worst,  or  at 
least  the  most  subtle  and  far-extended  offender ;  but  profiting  by 
its  example,  the  Sugar  Trust,  the  Beef  Trust,  the  Tobacco  Trust, 
and  numerous  other  virtual  monopolies  were  growing  to  a  colossal 
size  where,  by  sheer  strength  or  weight,  they  could  at  will  strangle 
or  crush  their  lesser  competitors.  Oftentimes  the  independent 
producer  or  trader  did  not  wish  to  adopt  simliar  methods  and  for 
a  time  engaged  in  a  valiant  battle  for  the  retention  of  its  own  ac- 
customed field ;  but  as  in  the  case  of  the  Pratts  with  their  recog- 
nized and  favorably  known  product,  "Astral  Oil,"  the  result  was 
certain  to  occur  with  monotonous  regularity,  viz :  they  gave  over 
the  fight  against  superior  numbers,  capital  and  efficiency  In  trade, 
and  by  amalgamation  became  an  integral  part  of  the  trust.  Years 
before,  the  Standard  Oil  Company  had  compelled  the  Pennsyl- 
vania Railroad  to  surrender  upon  ignominious  terms. 

In  despair  at  this  perversion  of  public  utilities  and  at  the  rapid- 
ly increasing  centralization  of  business,  with  the  equally  rapid 
dwindling  of  opportunities  for  a  prosperous  career  on  the  part 
of  enterprising,  industrious  and  ambitious  men  of  ordinary  re- 
sources, the  nation  turned  to  Congress  for  relief.  And  their  ap- 
peal was  not  in  vain. 

5.  VARIOUS  DRAFTS  OF  MEASURE  CONSIDERED. 

Measure  for  Relief  Introduced. — In  December,  1889,  at  the  in- 
stance of  Senator  Sherman,  the  Senate  bill,  drafted  by  him  was 


74  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

introduced,  intended  to  meet,  curb  and  cure  the  monopolistic 
tendency  displayed  by  the  predatory  interests  of  that  period.  His 
bill  as  originally  presented  contains  much  that  in  the  session  of 
the  following  year  was  merged  into  the  existing  Sherman  Act, — 
the  main  distinguishing  point  being  that  the  earlier  law  did  not 
confine  itself  to  prohibiting  monopolies  in  restraint  of  commerce. 
Since  the  right  to  so  legislate  must  rest  for  its  constitutionality 
upon  the  clause,  "Congress  shall  have  power  to  regulate  commerce 
with  foreign  nations  and  among  the  several  States  and  with  the 
Indian  tribes,"  it  was  felt  that  the  measure  should  be  redrafted ; 
and  in  consequence  it  was  returned  to  the  Judiciary  Committee, 
where  after  various  experiences  the  existing  law  was  drawn  by 
Senator  George  F.  Hoar.  It  was  submitted  impersonally  as  the 
committee's  substitute  for  the  earlier  bill.  Not  until  thirteen 
years  had  passed  did  it  become  known  whose  hand  prepared  this 
now  celebrated  statute. 

6.  SUPPORTING  ARGUMENT  IN  SENATE. 

Its  Enactment  Urged. — When  the  original  bill  was  before 
Congress,  Senator  Sherman  made  an  earnest  plea  for  its  favor- 
able reception.  He  spoke  as  the  advocate  of  the  people  whose 
prosperity  as  individuals  and  as  a  public  body  was  so  largely  at 
stake.  He  insisted  that  the  word  "commerce"  as  employed  in 
the  Constitution  is  an  expression  of  widest  scope, — 

"It  means  the  exchange  of  all  commodities  between 
different  places  or  communities.  It  includes  all  trade  and 
traffic,  all  modes  of  transportation  by  land  or  sea,  all  kinds 
of  navigation  *  *  *  every  mode  of  transit.  *  *  * 
The  power  of  Congress  extends  to  all  this  commerce,  ex- 
cept only  that  limited  within  the  bounds  of  a  State." 

"Many  of  these  powers,"  he  continued,  "have  remained 
dormant,  unused,  but  plainly  there,  awaiting  the  growth 
and  progress  of  our  country,  and  when  the  time  comes,  we 
find  in  that  instrument  provided  for  thirteen  States,*  *  * 
all  the  powers  necessary  to  govern  a  continental  empire." 

Argument  Continued. — Feeling  thus  assured  that  the  inherent 
power  which  Congress  possessed  under  its  right  to  "regulate  com- 
merce" carried  with  it  the  authority  to  destroy  absorption  or  in- 
terference therewith  by  monopolies  and  trusts, — Senator  Sherman 


SHERMAN  ANTI-TRUST  LAW.  75 

dwelt  with  great  earnestness  upon  the  necessity  for  immediate 
legislation  commensurate  with  the  object  to  be  attained.    He  said : 

"Associated  enterprise  and  capital  are  not  satisfied  with 
partnerships  and  corporations  competing  with  each  other, 
and  have  invented  a  new  form  of  combination  commonly 
called  'trusts,'  that  seeks  to  avoid  competition  by  combin- 
ing the  controlling  corporations,  partnerships,  and  indi- 
viduals engaged  in  the  same  business,  and  placing  the 
power  and  property  of  the  combination  under  the  govern- 
ment of  a  few  individuals,  and  often  under  the  control  of  a 
single  man  called  a  trustee,  a  chairman,  or  a  president.  The 
sole  object  of  such  a  combination  is  to  make  competition 
impossible.  It  can  control  the  market,  raise  or  lower  prices 
as  will  best  promote  its  selfish  interests  *  *  *.  The 
law  of  selfishness  uncontrolled  by  competition,  compels  it 
to  disregard  the  interest  of  the  consumer.  It  dictates  terms 
to  transportation  *  *  *.  Such  a  combination  is  far 
more  dangerous  than  any  heretofore  invented  *  *  *. 
It  is  a  substantial  monopoly  injurious  to  the  public,  and  by 
the  rule  of  both  the  common  law  and  the  civil  law  is  null 
and  void  and  the  just  subject  of  restraint  by  the  courts ;  of 
forfeiture  of  corporate  rights  and  privileges  and,  in  some 
cases,  should  be  denounced  as  a  crime,  and  the  individuals 
engaged  in  it  should  be  punished  as  criminals.  It  is  this 
kind  of  a  combination  we  have  to  deal  with  now." 

In  that  spirit  and  with  words  of  ringing  force  and  no  uncertain 
sound,  Senator  Sherman  brought  the  full  impact  of  his  weighty 
and  powerful  mind  and  influence  to  bear  upon  the  subject  before 
him. 

7.  TENTATIVE  MEASURES   CONSIDERED. 

Drafts  of  Measure  Express  its  Intent. — The  earlier  drafts  and 
amendments  all  bear  witness  to  the  intention  to  include  interfer- 
ence with  full  and  free  competition  as  well  as  entire  or  partial 
monopoly,  among  the  prohibited  class.  This  appears  in  the  title 
of  the  original  act, — "A  bill  to  declare  unlawful  trusts  and  com- 
binations in  restraint  of  trade  and  production,"  which  in  the  bill 
as  passed  was  amended  so  as  to  conform  to  its  narrowed  scope, 
and  to  read,  "A  bill  to  protect  trade  and  commerce  against  un- 


76  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

lawful  restraints  and  monopolies."  In  the  debate  preceding  the 
final  vote — unanimous  in  the  Senate  except  for  one  uncelebrated 
Senator  from  New  Jersey,  and  unanimous  in  the  House — Senator 
Hoar  enunciated  the  official  definition  of  "monopoly"  agreed  upon 
by  the  Senate  Judiciary  Committee  as  "the  sole  engrossing  to  a 
man's  self,  by  means  which  prevent  other  men  from  engaging  in 
fair  competition  with  him." 

Definition  Suggestive  of  Anti-trust  Term. — Perhaps  this  defi- 
nition is  the  genesis — the  originating  germ — from  which  springs 
the  term  "unfair  methods  of  competition  in  commerce."  The  ef- 
fort to  retain  the  essence  of  the  original  idea,  while  at  the  same 
time  linking  it  closely  with  the  "commerce"  clause  of  the  Consti- 
tution, is  too  obvious  for  comment.  As  in  the  case  of  the  orig- 
inators of  the  Sherman  Law,  the  sponsors  of  the  modernized 
Anti-trust  legislation  realized  that  it  must  pass  through  the  severi- 
ties of  an  "acid  test."  In  that  historic  debate  in  1890,  Senator 
Vest  of  Missouri,  exclaimed:  "This  bill,  if  it  becomes  a  law, 
must  go  through  the  crucible  of  a  legal  criticism  which  will  avail 
itself  of  the  highest  legal  talent  throughout  the  entire  Union.  It 
will  go  through  a  furnace  not  seven  times,  but  seventy-seven 
times  heated." 

Wider  Scope  of  Proposed  Law.— It  is  not  given  to  the  mind 
of  man  to  deduce  what  would  have  occurred,  if  non-existent 
facts  had  existed  in  a  given  situation ;  but  it  is  possible  to  assume 
that  if  the  Sherman  Act  had  retained  the  words  of  the  original 
draft,  "That  all  arrangements,  contracts,  agreements,  trusts,  or 
combinations  between  persons  or  corporations  made  with  a  view 
to  prevent  full  and  free  competition  in  the  importation,  transpor- 
tation, or  sale  of  articles  imported  into  the  United  States,  or  in 
the  production,  manufacture,  or  sale  of  articles  of  domestic  growth 
or  production  *  *  *  designed  or  which  tend  to  advance  the 
cost  to  the  consumer  of  any  such  articles,  are  hereby  declared 
against  public  policy,  unlawful  and  void," — the  growth  of  trade- 
domination  by  "unfair  methods  of  competition  in  commerce" 
would  not  have  reached  a  point  requiring  a  supplementary  law 
and  an  act  creating  the  Federal  Trade  Commission  to  regulate, 
control  and  apply  reforming  measures  to  the  interstate  business  of 
the  nation.4 

4  For  a  resume  of  this  memorable  debate  and  for  the  original  drafts  of 
the  Sherman  Law,  see  Appendix  M,  pages  304-334;  also  see  Walker's  His- 
tory of  the  Sherman  Law,  pages  I  to  54 ;  Thornton,  "The  Sherman  Anti- 
trust Act,"  Chapter  I. 


SHERMAN  ANTI-TRUST  LAW.  77 

Constitutionality  thereof  Considered. — Perhaps  in  that  event 
the  Supreme  Court  would  have  applied  a  different  rule  in  the 
Knight  case,  and  the  right  to  regulate  production  and  manufac- 
ture would  have  been  declared  within  the  constitutional  authority 
to  legislate  conferred  by  the  "Commerce"  clause.  The  Sherman 
Law  has  exercised  a  salutary  influence^  in  a  wide  field ;  but  much 
territory  it  could  not  or  at  least  did  not\  reach,  and  in  that  unregu- 
lated zone  conditions  that  cause  and  attepd  unrestricted  trusts  and 
monopolies  have  had  opportunities  to  produce  their  logical  results. 

8.  SCOPE  AND  EFFECT  OF  LAW  AS  ENACTED. 

Consideration    from    General    View    Point,    Continued.— 

Those  who  wish  to  study  the  conditions  from  which  the  Sherman 
Law  evolved  will  find  the  essential  facts  set  forth  in  an  interest- 
ing and  reliable  form  in  Walker's  History  of  the  Sherman  Law ; 
while  reference  to  Appendix  M,  page  304,  post,  will  disclose  the 
source  of  the  Acts  to  Regulate  Commerce,  which,  beginning  with 
the  original  law  of  1887  instituting  the  Interstate  Commerce  Com- 
mission,4* have  since  broadened  out  in  various  particulars.  While 
these  laws  are  not  technically  included  in  the  list  of  Anti-trust 
laws  contained  in  Section  I  of  the  Clayton  Law, — the  Interstate 
Commerce  Commission  is  referred  to  at  various  places  in  that 
statute  and  in  its  attendant  law,  the  Federal  Trade  Commission 
Act.  The  form  and  procedure  of  the  Interstate  Commerce  Com- 
mission have  been  copied  so  closely  that  attention  to  the  terms  of 
the  Acts  to  Regulate  Commerce  will  be  of  great  service  towards 
a  clear  understanding  of  the  subject  of  Anti-trust  legislation, — 
including  the  Sherman  Law,  which  followed  in  1890,  only  three 
years  later  than  the  enactment  of  the  creating  act. 

As  has  been  stated,  the  Acts  to  Regulate  Commerce,  like  the 
Federal  Trade  Commission  Act,  are  not  enumerated  among  the 
Anti-trust  laws ;  but  they  are  all  correlated,  and  at  the  very  least 
should  be  regarded  as  attendant  enactments  which  are  vital  and 
necessary  to  complete  the  scheme  and  make  it  effectual. 

In  an  instructive  contribution  on  the  subject  in  hand,5  a  recent 
writer  has  indicated  that  in  his  opinion  the  provision  of  the  Con- 
stitution empowering  Congress  to  regulate  commerce  was  first  in- 

4a  For  text  of  statute,  see  Appendix  O,  pages  345-361. 

5  James  A.  Fayne :  "The  Federal  Trade  Commission ;  The  Development 
of  the  Law  which  Led  to  Its  Enactment," — The  American  Political  Science 
Review,  February,  1915. 


78  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

terpreted  in  1876  in  such  a  way  as  to  charge  business  with  a  public 
interest.  The  case  he  quotes  is  Munn  v.  Illinois,  94  U.  S.  113,  and 
the  issue  involved  therein  grew  out  of  the  assertion  by  certain 
elevator  owners  of  the  right  to  Collect  discriminatory  charges  for 
storing  grain. 

The  Supreme  Court  held  in  accordance  with  an  English  author- 
ity, Lord  Chief  Justice  Hale,  in  De  Portibus  Maris, — 

"looking  then  to  the  common  law,  from  whence  came  the 
rights  which  the  Constitution  protects,  we  find  that  when 
private  property  is  'affected  with  a  public  interest,  it  ceases 
to  be  private  property  only.'  " 

In  finding  that  the  warehouse  of  the  appealing  party  was  so 
charged  with  a  public  interest,  the  Supreme  Court  stated — 

"while  the  rights  of  property  which  have  been  created  by 
the  common  law  cannot  be  taken  away  without  due  proc- 
ess" *  *  *  due  process  can  be  altered  at  the  will  of 
the  legislators  within  constitutional  limitations,  and  it  is 
the  province  and  function  of  that  department  of  govern- 
ment to  remedy  defects  in  the  common  law  as  they  are 
developed  and  adapt  it  to  the  changes  of  time  and  circum- 
stances." 

Such  being  the  rule  when  the  enactments  of  a  State  legislature 
are  concerned,  the  rule  in  matters  within  the  power  of  Congress 
is  still  broader  and  less  circumscribed,  seeing  that  the  common 
law  as  such  does  not  enter  directly  into  Federal  jurisprudence, 
leaving  the  legislative  rights  untrammeled  except  by  boundaries 
which  the  Constitution  itself  prescribes.  It  is  not  difficult  from 
this  beginning  (if  it  be  the  fountain  head),  to  follow  the  flow  of 
the  stream  through  intermediate  holdings  including  the  Standard 
Oil  and  the  Tobacco  cases  down  to  the  natural  outlet  in  an  inter- 
state trade  commission  equipped  to  enforce  conditions  of  equality 
in  right  to  trade,  by  the  abolition  of  illegal  restraints  and  combina- 
tions. 

In  contradistinction  to  the  narrowing  tendency  shown  in  the 
Knight  case,6 — holding  that  manufacture  is  not  "commerce,"  (see 
page  77),  it  may  be  pointed  out  that  the  courts  have  of  late  held 
the  ownership  of  forty-six  per  cent,  without  the  employment  of 

6  U.  S.  v.  E.  C.  Knight,  156  U.  S.  i. 


SHERMAN  ANTI-TRUST  LAW.  79 

an  intermediary  holding  company,  is  a  prohibited  act  where  the 
servient  company  is  a  potential  competitor.7  Even  when  "an  ab- 
sence *  *  *  of  all  the  elements  of  undue  injury  to  the  public 
and  undue  restraint  of  trade"  is  shown  to  exist,  there  is  still  a 
violation  of  the  second  section  of  the  Sherman  Law  where  the 
tendency  of  the  combination  was  to  destroy  competition  and  create 
and  maintain  a  monopoly.8  This  is  the  latest  authoritative  de- 
cision; and  it  seems  to  prepare  the  way  for  the  Federal  Trade 
Commission  with  its  prime  purpose  of  overcoming  the  twin  ob- 
stacles— undue  combinations  and  unfair  competition. 

This  decision  (the  Harvester  Case)  is  by  the  United  States 
Circuit  Court  of  Appeals.  It  has  yet  to  stand  the  test  of  scrutiny 
and  review  in  the  appeal  now  pending  in  the  Supreme  Court ;  but 
until  the  decision  is  modified  or  reversed,  it  constitutes  the  latest 
authoritative  judicial  version  of  the  doctrines  which  have  grown 
to  be  controlling  in  Anti-trust  proceedings.  The  decision  goes 
very  far,  and  while  logical  in  its  reasoning,  it  may  well  be  that 
the  Supreme  Court  will  regard  the  requirements  impossible  of 
performance,  under  actual  business  conditions  in  the  world  of 
large  finance. 

Whatever  the  outcome  of  this  important  appeal,  it  is  not  at  all 
probable  the  rules  controlling  in  Anti-trust  litigations  will  ex- 
perience any  radical  change,  for  those  principles  are  now  estab- 
lished firmly  as  a  part  of  our  jurisprudence,  and  as  is  noted  by  the 
author  of  the  valuable  article  referred  to  on  page  77,  "in  both 
[the  Union  Pacific  merger  and  the  Harvester]  cases  no  new  ex- 
pressions of  opinion  were  recorded."  In  brief,  recent  decisions 
have  turned  upon  how  far  or  in  what  manner  principles  now 
recognized  as  established  shall  be  applied. 

9.  CONSTITUTIONAL  QUESTIONS  SETTLED  BY  SU- 
PREME COURT. 

Judicial  Construction  Appears  Settled. — Even  though  the  Su- 
preme Court  does  not  affirm  the  Harvester  decision,  the  legal  as- 
pect may  be  considered  a  closed  incident,  for  (as  has  been  men- 
tioned), in  neither  of  these  important  decisions  is  there  a  new 
expression  of  opinion  on  the  substantive  Anti-trust  laws.  After 
the  tumultous  legal  proceedings  wherein  the  Standard  Oil  Com- 

7  U.  S.  v.  Union  Pacific  Railroad,  226  U.  S.  306. 

8  U.  S.  v.  Int.  Harvester  Co.,  214  Fed.  987. 


So  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

pany  was  fined  $26,000,000  in  the  lower  courts,  and  the  American 
Tobacco  Company  had  damages  enforced  against  it  under  the 
treble  damage  clause  of  the  Sherman  Act,  this  condition  appears 
like  a  halcyon  period  indeed,  wherein  the  new  Commission  can 
begin  the  performance  of  its  duties,  with  a  confidence  based  upon 
results  that  a  long  and  hard  fought  litigation  has  produced. 

Constitutional  Question. — The  question  of  the  constitutional- 
ity of  the  Sherman  Law  having  been  thus  disposed  of,  with  it 
are  adjusted  problems  that  might  otherwise  come  up  in  reference 
to  the  statutes  not  within  the  list  of  Anti-trust  laws,  as  strictly 
enumerated  in  the  statutes  themselves. 

The  Sherman  Law  is  within  the  enumerated  class ;  but  the  de- 
cisions relating  thereto  are  for  the  most  part  applicable  to  all.  In 
the  Northern  Securities  case,9  it  was  held  that  a  large  discre- 
tion pertains  to  Congress  when  it  is  performing  its  legislative 
duties,  and  that  a  sound  construction  allows  great  latitude  "with 
respect  to  the  means  by  which  the  powers  it  confers  are  to  be 
carried  into  execution,  which  enable  that  body  to  perform  the  high 
duties  assigned  to  it,  in  the  manner  most  beneficial  to  the  people." 

Under  a  case  of  equal  authority,10  the  Supreme  Court  held  in 
applying  the  "commerce"  clause  of  the  Constitution  in  its  relation 
to  the  Sherman  Law : 

"Under  this  grant  of  power  to  Congress,  that  body,  in 
our  judgment,  may  enact  such  legislation  as  shall  declare 
void  and  prohibit  the  performance  of  any  contract  between 
individuals  or  corporations  where  the  natural  and  direct 
effect  of  such  a  contract  will  be,  when  carried  out,  to  di- 
rectly and  not  as  a  mere  incident  to  other  and  innocent 
purposes,  regulate,  to  any  substantial  effect,  interstate  com- 
merce." 

The  above  case  as  to  its  facts  disclosed  an  ingenious  device 
whereby  manufacturers  of  pipe  within  a  certain  district 
joined  a  combination  and  every  member  agreed  under  penalty  to 
sell  only  subject  to  its  rules.  Each  contract  was  submitted  to  com- 
petition within  the  combination,  and  the  successful  bidder  was 
then  free  to  undertake  the  work  at  the  best  terms  he  could  obtain, 
without  competition  from  his  associate  members.  This  plan  in- 

9  U.  S.  v.  Northern  Securities  Co.,  193  U.  S.  197. 

10  Addystone  Pipe  &  Steel  Co.  v.  U.  S.,  175  U.  S.  211. 


SHERMAN  ANTI-TRUST  LAW.  81 

sured  some  profit  to  all,  but  at  an  additional  cost  to  the  public. 

To  the  same  effect  upon  the  constitutional  question  involved, 
is  a  State  court  decision : 

"The  State  has  a  right  to  limit  individual  rights  when 
their  exercises  touches  the  public,  and,  if  unrestrained, 
would  be  prejudicial  to  order  or  to  progress."11 

In  the  same  court  it  had  already  been  held  and  declared  that  a 
trust  is  illegal  under  the  common  law.12 

10.  BENEFITS  FROM  ANTI-TRUST  ACT. 

Interpretation  and  Application  of  Act — The  object  sought 
to  be  accomplished  by  the  Sherman  Act  is  to  afford  a  remedy  for 
the  injurious  effect  of  unrestrained  competition.  Like  most  prin- 
ciples of  wide  application  in  the  personal  or  business  affairs  of 
men,  competition  ceases  to  be  an  advantage — far  less  an  infalli- 
ble panacea — when  applied  without  limit  or  modification  to  many 
tangible  and  concrete  situations.  Competition  then  becomes  a 
"glittering  generality"  and  is  only  too  likely  to  mislead  the  con- 
fiding individual  or  nation.  Just  as  it  has  been  held  "the  great 
office  of  the  statutes  is  to  remedy  defects  in  the  common  law  as 
they  are  developed  and  to  adapt  it  to  the  changes  of  time  and 
circumstances"  (Munn  v.  Ililnois,  94  U.  S.  113),  socialism  has 
entered  into  the  everyday  problems  of  modern  society  and  has  en- 
deavored to  solve  them  to  the  end  that  the  ordinary  citizen  shall 
not  find  existence  too  hard  or  too  complex  to  be  borne.  The 
saying  attributed  to  Lincoln,  "God  loved  the  common  people — he 
made  so  many  of  them,"  has  an  application  here,  for  the  State 
must  concern  itself  with  the  welfare  of  its  individual  citizens, 
since  in  times  of  peace  their  composite  condition  and  wealth  is 
the  measure — the  sum  total — of  its  prosperity  and  material  re- 
sources ;  and  from  their  numbers  must  be  gathered  the  lists  that 
elect  public  officials  and  supply  jurors ;  while  in  seasons  of  war 
their  courage  and  patriotism  are  its  sure  defense. 

Socialistic  Influences  are  Apparent. — Socialism,  unconscious- 
ly to  most  of  the  persons  concerned,  enters  into  the  make  up  of 
political  life  and  affairs.  Thus,  the  childless  pay  their  full  pro- 
portion of  the  tax  for  maintaining  schools  in  recognition  of  the 

11  Wood  v.  Whitehead  Bros.,  165  N.  Y.  545,  550. 

12  People  v.  North  River  Sugar  Co.,  121  N.  Y.  582. 
6 


82  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

direct  benefit  which  intelligence  and  mental  discipline  on  the  part 
of  the  general  public  confer  upon  every  resident  and  owner  of 
property ;  while  the  transfer  tax  in  a  more  radical  manner  appro- 
priates a  portion  of  the  unearned  increment  which  inures  to  heirs, 
and  applies  it  to  the  common  fund  comprised  in  the  budget  re- 
quired to  meet  the  expenses  of  government. 

Unregulated  Competition  Effectuates  Trusts. — It  is  too  late 
in  the  day  to  feel  required  to  dilate  upon  the  injuries  that  re- 
sulted from  the  unwillingness  of  the  State  to  divorce  itself  from 
ftie  vague  generality  that  unlimited  and  unrestrained  competition 
is  a  blessing  and  advantage  in  every  situation  and  under  all  cir- 
cumstances. The  chapter  in  our  national  life  that  is  inscribed 
with  the  record  of  Standard  Oil,  the  Beef  Trust  and  kindred 
combinations  is  written  too  plainly  and  is  too  recent  for  more 
than  passing  notice  by  way  of  illustration;  fortunately  these 
situations  so  inimical  to  general  social  and  economic  progress,  are 
at  last  in  a  fair  way  to  be  relegated  to  the  sphere  of  history ;  and 
whatever  problems  the  Republic  shall  be  called  upon  in  future  to 
face  in  working  out  the  practical  application  of  its  career  and 
aims  in  national  life,  the  vital  questions  of  the  prevention  and 
control  of  predatory  trusts  seem  well  in  hand  and  in  a  fair  way  to 
be  solved  through  preventive  and  curative  legislation  well  adapted 
to  achieve  that  end.  At  least,  as  we  have  seen,  such  was  the  Con- 
gressional purpose,  when  enacting  the  Clayton  Law;  and  also 
when  providing  the  machinery  of  the  Federal  Trade  Commission 
to  carry  into  effect  that  supplement  to  the  Anti-trust  laws. 

Limitation  of  Relief  to  Results  Obtained  by  Suits  Solely 
Instituted  by  Government, — A  Grave  Question. — It  has  been 
shown  (pages  77,  78),  that  much  retracing  of  steps  along  the 
pathway  leading  to  the  restraint  and  control  of  illicit  monop- 
olies and  restraints  of  trade  became  necessary  because  of  the 
narrow  definition  of  "commerce"  adopted  and  applied  by  the  Su- 
preme Court  in  the  Knight  case.18  That  there  was  some  doubt 
as  to  the  extent  to  which  the  courts  would  go  in  applying  the 
statute,  and  that  it  was  fully  recognized  that  a  narrow  and  tech- 
nical construction  might  nullify  its  terms,  is  apparent  in  the 
record  of  the  discussion  which  attended  the  passage  of  the  Sher- 
man Law. 

After  it  had  received,  with  the  exception  of  one  vote,  the 

13  U.  S.  v.  E.  C.  Knight  Co.,  156  U.  S.  i. 


SHERMAN  ANTI-TRUST  LAW.  83 

unanimous  approval  of  the  Senate,  the  proposed  measure  was 
taken  up  by  the  House,  May  I,  1890,  and  the  debate  became 
general.  In  the  course  of  his  defense  of  its  provisions,  Mr.  Cul- 
berson,  of  Texas,  while  speaking  for  the  Judiciary  Committee, 
was  interrogated  by  Mr.  Henderson,  of  Iowa,  as  to  whether 
in  view  of  the  market-control  secured  by  the  trusts — "this  bill,  in 
his  judgment,  reaches  that  difficulty  or  not."  To  this  question 
Mr.  Culberson  replied  by  saying:  "I  believe  it  will  if  it  is  con- 
strued as  we  think  it  ought  to  be  construed  by  the  courts."  Mr. 
Henderson  then  continued  his  enquiry  by  asking:  "Does  the 
bill  go  as  far  as  Congress  has  power  to  go  to  strike  at  that  damna- 
ble system?"  To  which  Mr.  Culberson  replied:  "That  is  the 
opinion  of  the  committee."14 

In  the  first  particular,  the  courts  have  justified  the  confidence 
reposed  in  their  wisdom  and  acumen  through  a  later  virtual  re- 
versal of  the  attitude  adopted  in  the  Knight  case;  but  it  is  now 
apparent  that  Congress  "had  power  to  go"  several  steps  further 
by:  (i)  assuming  a  broader  definition  of  "commerce"  and  so 
enlarging  the  scope  of  the  law  as  to  include  interferences  therewith 
as  well  as  restraints  and  monopolies,  among  the  prohibited  acts ; 
and  (2)  granting  specifically  and  beyond  question  to  individuals 
the  power  to  invoke  its  aid. 

It  is  certain  that  failure  to  include  any  right  of  individual 
initiative  had  much  to  do  with  limiting  the  usefulness  of  the 
statute  and  deferring  the  date  of  its  active  employment  in  the 
protection  of  public  interests. 

ii.  FOREIGN  ANTI-TRUST  LAWS  DISCUSSED. 

Canadian  Anti-Trust  Law  Considered. — That  wisdom  is 
not  confined  to  any  land — is  not  the  perquisite  of  any  race  or 
government — is  shown  by  the  provisions  existing  in  the  neighbor- 
ing Canadian  jurisdiction. 

In  contradistinction  to  the  distrust  of  individual  action  and 
the  preference  for  bureaucratic  ideas  and  methods  displayed  by 
the  Federal  party  at  the  inception  of  our  government,  leaving 
some  trace  thereof  discernable  in  the  attitude  of  Senators  Sher- 
man, Hoar  and  Edmunds  and  others  of  that  school  of  thought  a 
century  later, — it  is  refreshing  to  see  democratic  ideals  success- 

14  Congressional  Record,  5ist  Congress,  first  session,  pages  4090-4091. 


84  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

fully,  put  in  force  and  practice,  even  though  under  a  government 
which  is  monarchial  in  name. 

In  Canada,  as  mentioned  above,  anti-trust  regulations  are  not 
left  to  be  enforced  solely  by  public  officials,  for  the  citizens — or 
subjects — who  have  been  injured  or  fear  injury  are  presumed  to 
possess  the  intelligence,  foresight  and  courage  to  defend  their 
rights,  when  the  weapon  is  placed  in  their  hands  or  within  their 
reach. 

Thus,  it  is  provided  in  the  Canadian  laws15  that — 

"Where  six  or  more  persons,  British  subjects  resident 
in  Canada  and  of  full  age,  are  of  opinion  that  a  combine 
exists,  and  that  prices  have  been  enhanced  or  competition 
restricted  by  reason  of  such  combine,  to  the  detriment  of 
consumers  or  producers,  such  persons  may  make  an  ap- 
plication to  a  judge  for  an  order  directing  an  investigation 
into  such  alleged  combine."  Upon  receiving  the  petition, 
the  judge  within  ten  days  must  appoint  a  time  and  place 
for  an  investigation,  with  full  power  to  summon  witnesses, 
grant  adjournments,  and  to  enquire  into  every  essential 
fact. 

The  statute  then  proceeds: 

"If  upon  such  hearing  the  judge  is  satisfied  there  is  rea- 
sonable ground  for  believing  that  a  combine  exists  which 
is  injurious  to  trade,  or  has  operated  to  the  detriment  of 
consumers  or  producers,  and  that  it  is  in  the  public  in- 
terest that  an  investigation  should  be  held,  the  judge  shall 
direct  an  investigation  under  the  provisions  of  this  act." 

The  complainant  and  the  defending  party  are  each  entitled  to 
nominate  a  member  of  the  statutory  board  of  enquiry,  and  these 
members  are  empowered  to  select  a  judge,  who  shall  sit  as  the 
third  member  of  the  board,  and  shall  preside  at  its  meetings. 

Full  publicity  for  their  report  is  provided.  The  penalty  for  dis- 
obedience, if  the  charge  is  sustained,  consists  of  $1,000  for  each 
day  of  continued  trade-restraint  after  the  date  set  for  cessation 
of  the  prohibited  acts ;  and  the  import  laws  may  be  so  modified 

15  Combines  Investigation  Act  (1910),  9-10  Edward  VII,  Chap.  9;  An 
Act  to  Amend  Inland  Revenue  Act,  4  Edward  VII,  Chap.  17;  Canadian 
legislation  concerning  patents,— Revised  Statutes  of  Canada,  Vol.  Ill,  Chap. 
146,  Sections  496-498.  For  Anti-trust  measure  antedating  Sherman  Law 
and  containing  provision  prohibiting  undue  restraints  of  production,  etc., — 
see  Stat.  of  Canada,  1889,  Chap.  41. 


SHERMAN  ANTI-TRUST  LAW.  85 

as  to  permit  free  importation  of  the  monopolized  articles,  or  an 
invention  may  be  removed  from  the  protection  of  letters  patent, — 
as  the  particular  situation  requires.  In  addition,  the  person — 
"who  thereafter  continues  so  to  offend,  is  guilty  of  an  indictable 
offense." 

The  proceeding  throughout  is  summary;  and  the  enforcement 
is  at  no  stage  hampered  by  undue  delay : 

"The  governor  in  council  may  make  such  regulations 
not  inconsistent  with  this  act,  as  to  him  seem  necessary  for 
carrying  out  the  provisions  of  this  act  and  for  the  ef- 
ficient administration  thereof." 

Within  fifteen  days  after  any  of  the  steps  thus  authorized  are 
taken  by  the  governor,  he  is  required  to  transmit  the  regulations 
for  consideration  by  the  provincial  parliament  if  in  session,  or 
at  the  next  session  of  that  legislative  body. 

Plan  Apparenty  Offers  Immediate  Effective  Relief. — Here 
we  have  in  effect  a  complete  plan  for  immediate  effective  check- 
ing of  monopolistic  tendencies  "where  six  or  more  persons"  feel 
themselves  aggrieved. 

United  States  and  Canadian  Procedure  Compared. — When 
these  provisions  combining  simplicity  of  method  with  the  promise 
of  prompt  and  efficacious  results  are  read  in  parallel  columns  with 
the  tedious  and  cumbersome  chancery  practice  provided  under  the 
Sherman  Anti-trust  statute,  it  is  readily  seen  that  benefits  of 
free  institutions  may  exist  in  superior  form  under  a  monarchial 
government.  In  brief,  the  changes  embodied  in  the  Clayton  Law 
and  the  Federal  Trade  Commission  Act  consist  of  a  necessary 
though  belated  modernization  of  our  Anti-trust  laws. 

Return  to  Normal  Conditions  Indicated. — It  is  fortunate 
that  trusts  and  monopolies  have  been  to  so  considerable  an  extent 
removed  or  curbed  under  laws  in  which  distrust  of  citizen- 
initiative  constituted  a  predominant  feature;  but  it  would  have 
been  folly  to  longer  delay  the  enactment  of  laws  which  will  expe- 
dite the  return  of  conditions  of  normal  and  healthy  competition 
in  business,  extending  throughout  the  general  field  of  commerce, 
and  reaching  into  every  department  of  national  life. 

Further  Consideration  of  Foreign  Anti-trust  Regulations. 
— Other  foreign  jurisdictions  have  provided  other  means  of  en- 
forcement for  measures  intended  to  meet  and  overcome  monop- 
olies and  restraints  of  trade. 


86  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

In  Great  Britain16  the  solution  of  this  problem  has  been  sought 
through  enforced  publicity  and  the  agency  of  boards  of  trade.  In 
Australia17  and  New  Zealand18  their  protective  statutes  bear  a 
general  resemblance  to  the  Anti-trust  laws  which  we  have  seen 
are  in  force  in  the  Dominion  of  Canada.  The  Colony  of  the 
Cape  of  Good  Hope  has  in  force  and  effect  an  "Act  to  Prevent 
a  Monopoly  of  the  Meat  Trade,"19  which  operates  by  means  of 
a  registered  license.  When  arbitrary  price-fixing  or  other  un- 
fair methods  in  restraint  of  traffic  are  shown,  the  license  may  be 
withdrawn  and  the  party  guilty  of  the  prohibited  practices  is  pre- 
vented from  again  engaging  in  that  line  of  business  for  the  space 
of  two  years. 

Under  the  laws  of  Japan,  if  a  company  does  acts  contrary  to 
the  public  welfare  or  to  good  morals,  the  court  may  on  the  ap- 
plication of  a  public  procurator  or  of  its  own  motion  order  its 
dissolution.20 

"Unfair  competition"  as  a  term  relating  to  statutes  and  regu- 
lations that  concern  restraints  of  trade,  is  an  expression  which 
appears  to  have  been  coined  in  Australia ;  and  the  revision  of  our 
Anti-trust  laws  owes  much  of  its  form  and  presumptive  efficiency 
to  the  intelligent  ideas  which  the  dependencies  of  Great  Britain 
have  contributed  to  this  department  of  Anglo-Saxon  jurispru- 
dence. 

12.  COMMISSION  LAW  AND  CLAYTON  LAW  BROADEN 
MEANS  OF  RELIEF. 

Section  16  of  the  Clayton  Law  Supplies  Adequate  Means 
of  Relief. — Fortunately  we  no  longer  find  it  requisite  to  wander 
afield  in  foreign  jurisdictions  or  to  search  the  statutes  of  our 
several  States  for  means  to  enable  individual  citizens  to  initiate 
methods  of  relief  when  beset  by  restraining  or  monopolistic  con- 
ditions in  trade ;  speedy  and  adequate  relief  may  now  be  secured 

16  Companies  (Consolidation)  Act,  1908,  25  and  26  Viet.,  Chap.  96,  Sec. 
84.    See  Chitty's  Digest  of  the  Laws  of  England ;  also  Encyc.  of  the  Laws 
of  England,  2d  Ed.,  Vol.  II. 

17  The    Australian    Industries    Preservation    Act,    1906;     the    Excise 
Tariff  (No.  16  of  1906) ;  the  Patent  Act  of  1903. 

18  Acts  for  Repression  of  Monopolies  in  Trade  or  Commerce,  New 
Zealand  Consol.  Statutes,  Vol.  IV,  Appendix  D,  Act  140,  Sec.  28  (1910). 

19  No.  15  of  Laws  of  1907. 

20  Commercial  Code  of  Japan,  Book  II,  Chap.  48  (Loenholm). 


SHERMAN  ANTI-TRUST  LAW.  87 

under  the  right  to  injunctions  contained  in  Section  16  of  the 
Clayton  Law. 

Governmental  Initiative  No  Longer  Required. — Every  citizen 
may  now  apply  for  a  restraining  order  where  the  injury  disclosed 
in  his  complaint  shows  a  violation  of  the  provisions  relating  to 
price  discrimination,  "tying"  contracts,  or  abuses  of  corporate 
methods  by  stock-ownership  or  control  of  the  board  of  directors. 
Such  injunctive  relief  may  be  sued  for  "in  any  court  of  the 
United  States  having  jurisdiction  over  the  parties." 

Whereas  even  a  State  could  not  procure  an  injunction  under 
Section  4  of  the  Sherman  Law,21  (such  relief  being  reserved  for 
use  in  proceedings  instituted  by  or  at  the  instance  of  the  Attor- 
ney-General in  the  government's  behalf,)  the  modern  doctrine 
enforced  by  positive  statutory  provisions  opens  the  door  to  every 
aggrieved  person,  in  the  field  which  covers  every  usual  form 
adopted  by  trusts  or  monopolies  in  their  efforts  to  retain  or  exploit 
a  given  line  of  trade. 

Earliest  Anti-trust  Decision  under  Sherman  Law. — The 
earliest  reported  decision  construing  Sections  I  and  2  of  the 
Sherman  Law  arose  upon  an  application  for  the  appointment  of 
a  receiver  in  connection  with  the  enforcement  of  a  sale  which 
the  defendant  claimed  to  be  void  because  intended  to  create  a  re- 
straint of  trade  and  virtual  monopoly.  The  court  says,  per 
curiam*2 

"Now  it  is  to  be  observed  that  these  statutes  [Sections 
i  and  2,  aforesaid;  also,  corresponding  provisions  in  the 
Anti-trust  Law  of  the  State  of  Louisiana]  outline  an  of- 
fence, but  require  for  its  complete  submission  no  ulterior 
motive,  such  as  to  defraud,  etc.;  and  further  that  the 
language  is  altogether  silent  as  to  what  means  must  be 
used  to  constitute  the  offence.  *  *  *  To  compass 
•either  of  these  things  [restraint  of  trade  or  monopoly], 
with  no  other  motive  than  to  compass  them,  and  by  any 
means,  constitutes  the  offence." 

In  reaching  its  conclusion,  adverse  to  the  application,  the  court 
notes  the  inversion  of  the  usual  order,  in  that  the  statutory  provi- 

21  Minnesota  v.  Northern  Securities  Co.,  194  U.  S.  48.    See  also,  Na- 
tional Fire-Proofing  Co.  v.  Mason  Builders  Association,  169  Fed.  259. 

22  American  Biscuit  and  Mfg.  Co.  v.  Klotz,  44  Fed.  721. 


88  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

sion  is  used  as  a  defence  in  meeting  an  alleged  effort  to  monop- 
olize; then,  commenting  upon  the  general  object  of  the  statute, 
the  decision  continues : 

"The  attempt  to  accumulate  in  the  hands  of  a  single  or- 
ganization the  business  [concerned  in  the  application] 
should  not  be  favored  by  a  court  of  equity.  It  carries  with 
it  too  much  of  danger  of  excluding  healthy  competition, 
thereby  increasing  the  difficulty  to  the  general  public  of 
participating  in  a  most  useful  business  [maintenance  of 
bakeries]  as  well  as  adding  to  the  possibility  of  multitudes 
of  citizens  being  temporarily,  at  least,  compelled  to  pay 
an  arbitrary  and  high  price  for  daily  bread." 

Reasoning  in  Early  English  Case  Sustained. — It  is  curious 
and  interesting  to  note  that  after  more  than  three  centuries,  the 
identical  defences  interposed  in  Darcy  v.  Allen  (pages  16,  19, 
ante},  is  again  regarded  with  favor  by  a  court  of  equity  jurisdic- 
tion, i.  e.,  the  loss  of  opportunity  to  the  individual  and  the  pres- 
ence of  an  indirect  but  measurable  damage  to  the  public-at-large, — 
which,  taken  together,  create  a  situation  where  public  policy  pro- 
hibits tribunals  from  compelling  compliance  with  trade-restrain- 
ing contracts. 

13.  NARROWING  ARGUMENT  EXAMINED. 

An  Analysis  of  Sections  i  and  2. — An  ingenious  writer,28 
has  devoted  attention  and  skill  to  an  analysis  of  "The  Face 
of  the  Sherman  Law,"  and  in  that  connection  has  dissected 
each  of  the  first  two  sections.  He  concludes  that  the  meaning  of 
Section  i  is — 

"clear,  precise  and  undebatable  in  all  its  words  except  two. 
Those  two  words  are  'restraint'  and  'commerce.'  *  *  * 
To  construe  those  two  words  is  to  construe  that  sentence. 
And  to  construe  that  sentence  is  to  take  the  first  and  only 
really  difficult  step  toward  construing  the  whole  statute." 

It  is  then  pointed  out  that  "restraint"  has  a  threefold  aspect : 

(a)  It  relates  to  and  was  intended  to  prohibit  restraints  both 
of  international  and  interstate  commerce; 

23  Albert  H.  Walker  in  "A  History  of  the  Sherman  Law,"  pages  48 
to  59- 


SHERMAN  ANTI-TRUST  LAW.  89 

(b)  The  meaning  "is  confined  to  direct  restraint  and  is  not 
aimed  at  indirect  restraint  of  interstate  or  international  com- 
merce." 

^  «  *  *  *  when  Congress  in  Section  I  of  the  Sherman 
Law  prohibited  combinations  in  restraint  of  interstate  and  inter- 
national commerce,  it  did  not  intend  to  make  that  law  the  founda- 
tion for  trivial  and  vexatious  suits," — whence  he  concludes  that 
the  acts  complained  of  must  be  "extensive  enough  to  be  material- 
ly injurious  to  public  or  private  welfare." 

Perhaps  without  such  intention,  it  may  be  that  the  authority 
quoted  is  in  part  responsible  for  the  situation  out  of  which  Anti- 
trust provisions  have  taken  shape  in  the  Clayton  Law  and  its 
corollary,  the  Federal  Trade  Commission  Act,  providing  the  legal 
machinery  for  the  enforcement  thereof.  Certain  it  is  that  "di- 
rect restraint"  would  preclude  the  prosecution  of  holding  com- 
panies and  other  intermediary  forms;  while  the  third  aspect 
would  leave  it  to  a  court  to  classify  wrongs  which  might  appear 
trivial  to  a  judge,  whereas  they  might  well  be  entirely  destructive 
of  the  business  interests  of  the  complainant. 

It  is  entirely  possible  that  this  construction  too  frequently  has 
led  to  a  tendency  to  look  upon  a  prosecution  under  the  Sherman 
Act  as  constituting  a  species  of  state  trial,  and  is  responsible 
for  the  tendency  to  avoid  the  responsibility  thereof, — a  condition 
that  prevailed  during  the  administration  of  President  Harrison. 
Usually  only  affairs  of  a  public  or  semi-public  nature  have  been 
considered  worthy  of  such  deliberation  or  action.  Something  of 
this  is  noticeable  in  the  prevailing  note  in  the  Standard  Oil  and 
other  leading  cases ;  while  no  doubt  unconscious  it  is  to  a  certain 
extent  discouraging  if  not  a  deterrent  to  an  injured  person  seek- 
ing redress. 

Arbitrary  classifications  are  part  and  parcel  of  the  social  and 
legal  systems  in  force  in  a  kingdom  or  aristocracy ;  equality  be* 
fore  the  law  is  the  touchstone  best  suited  to  the  administration  of 
justice  in  a  republic.  The  question  of  relative  size  is  always  un- 
gracious, and  it  is  one  that  should  be  avoided  where  the  statute 
itself  does  not  make  the  sum  involved  the  test  of  right  to  litigate. 

The  point  raised  in  (b)  of  the  passage  quoted  is  answered  by 
the  enactment  of  Sections  3,  7,  and  8  of  the  Clayton  Law,  wherein 
and  whereby  conditional  or  "tying"  contracts;  stock  ownership 


90  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

in  competing  concerns  direct,  or  through  the  medium  of  a  holding 
company;  and  interlocking  directorates — each  of  these  devices 
being  an  indirect  means  of  exercising  restraint — are  all  declared 
unlawful  where  the  acquisition  of  stock  tends  to  restrain  competi- 
tion in  the  community  or  to  create  a  monopoly  of  any  line  of 
trade. 

In  so  far  as  the  limitation  of  jurisdiction  by  excluding  trivial 
or  unimportant  cases  is  suggested  by  division  (c)  of  said  passage 
as  the  true  construction  of  the  word  "restraint"  in  Section  i  of 
the  Sherman  Law, — the  total  ignoring  of  the  amount  at  stake 
fixes  an  entirely  different  standard  for  proceedings  instituted 
under  the  Federal  Trade  Commission  and  Clayton  laws.  Under 
the  Federal  Trade  Commission  Act  the  sole  criterion  is  whether 
"a  proceeding  by  it  [the  Commission]  in  respect  thereof  would 
be  to  the  interest  of  the  public";  in  the  latter  the  Commission  or 
Board  has  the  right  to  set  its  restraining  or  curative  machinery  in 
motion  whenever,  at  the  instance  of  an  individual  feeling  himself 
aggrieved,  it  "shall  have  reason  to  believe  that  any  person  is  vio- 
lating or  has  violated  any  of  the  provisions,"  etc. ;  and  the  right 
to  proceed  independently  to  obtain  injunctive  relief  against 
"threatened  loss  or  damage"  by  violation  of  its  essential  prohibi- 
tions is  accorded  by  Section  16  of  the  same  law. 

Nothing  can  be  more  certain  than  that  the  legislation  embodied 
in  these  last-mentioned  statutes  is  purposed  to  nullify  a  property 
valuation,  if  such  a  classification  could  ever  be  properly  read  into 
the  words  of  Section  I  of  the  Sherman  Law.  Congress  has  de- 
creed that  in  future  the  enforcement  of  Anti-trust  laws  should  be 
effected  by  means  as  simple  and  direct  as  the  practice  in  Justice's 
Court, — "the  poor  man's  court." 

Reverting  to  the  arguments  advanced  by  the  able  author  men- 
tioned on  page  88,  the  word  "monopolize"  which  is  there  stated 
to  occupy  a  debatable  ground  as  its  specific  meaning — seems 
twisted  out  of  its  ordinary  signification.  After  referring  to  the 
Senate  committee's  definition  of  "monopolize,"  which  appears  on 
page  76,  supra,  the  author  argues  that — 

"Section  two  of  the  Sherman  Law  does  not  prohibit  a 
complete  acquirement  of  the  whole  or  any  part  of  inter- 
state or  international  commerce,  except  where  that  com- 
plete acquirement  results  from  efforts  of  the  monopolizer 


SHERMAN  ANTI-TRUST  LAW.  97 

to  prevent  other  parties   from  competing  with  him   in 
achieving  that  complete  acquirement. 
****** 

But  it  also  follows  that  where  a  particular  monopolizer 
does  or  does  not  possess  or  use  superior  skill  and  superior 
facilities  for  doing  the  work  monopolized,  but  does  attain 
a  monopoly  of  that  work  by  the  aid  of  impediments  placed 
by  him  in  the  path  of  his  competitors,  that  monopolizer 
violates  Section  2  of  the  Sherman  Law. 

Reason  for  Presenting  foregoing  Analysis. — This  view  has 
been  set  out  somewhat  at  length  because  of  the  clearness  of  the 
expressing  words  and  because  similar  ideas  have  been  repeated 
from  time  to  time  in  certain  decisions  under  the  Sherman  Law. 
But  the  argument  is  believed  to  be  fallacious ;  whatever  force  it 
may  possess  in  academic  discussion,  this  narrow  construction  has 
been  specifically  repudiated,  voided  and  set  at  rest  by  the  decisions 
in  the  Southern  Pacific  Railroad  case  and  to  a  large  extent  in  the 
International  Harvester  case,2*  as  well  (see  pages  19,  79,  ante). 
While  the  terms  of  the  existing  decision  in  the  Harvester  Case 
may  be  modified  or  its  application  limited  in  the  appeal  now  pend- 
ing in  the  Supreme  Court,  it  is  improbable  that  any  basic  prin- 
ciple of  Sherman  Law  construction  will  be  disturbed. 

Writer  Above  Quoted  Now  Controverted  by  Controlling 
Decisions. — The  judicial  determination  of  the  vexatious  prob- 
lem which  has  so  long  troubled  courts  and  counsel  now  bids  fair 
to  remain  established  as  the  law  of  the  land  in  cases  of  this  de- 
scription. It  will  no  doubt  be  observed  how  this  result  presents 
an  example  of  the  tendency  in  legal  affairs  to  hark  back  to  the 
mental  point  of  view  originally  reasoned  out  by  the  courts.  In 
this  instance  the  reference  is  to  the  per  curiam  opinion  in  the  first 
Sherman  Law  decision,  American  Biscuit  and  Mfg.  Co.  v.  Klotz, 
quoted  at  page  87,  where  a  literal  construction  is  deduced  and  ap- 
plied. 

Advantage  Definite  Ruling  Affords. — The  constitutionality 
of  the  Sherman  Law  is  now  firmly  established ;  and  it  is  fortu- 
nate that  this  question  of  constitutionality  should  have  reached 
a  definite  conclusion  and  the  old  order  should  have  changed  and 
moved  off  the  stage  before  the  advent  of  the  Federal  Trade  Com- 

24  U.  S.  v.  Union  Pacific  Rd.,  226  U.  S.  306;  U.  S.  v.  Int.  Harvester 
Co.,  214  Fed.  987. 


92  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

mission.  That  body  in  consequence  can  exert  its  important 
powers  under  a  new  dispensation — untrammelled  by  the  necessity 
for  carrying  through  a  long  and  complicated  series  of  litigations 
The  solution  of  this  difficult  and  intricate  question  would  other- 
wise necessarily  involve  uncertainty;  whereas  its  whole  atten- 
tion henceforth  can  be  devoted  to  the  settlement  of  new  problems, 
and  to  the  administrative  duties  it  is  called  upon  by  law  to  per- 
form. 

14.  DEFINITIONS  OF  "COMMERCE." 

Anti-trust  Definitions  of  "Commerce"  Compared. — While 
reference  is  being  made  to  "commerce"  as  regulated  by  the  Sher- 
man Law,  it  may  be  useful  to  turn  aside  for  a  moment  to  notice 
the  defining  words  contained  in  the  more  recent  Anti-trust  legis- 
lation. In  Section  4,  of  the  Federal  Trade  Commission  Act,  there 
appears  an  official  designation  of  the  meaning  of  that  word,  when 
found  in  this  particular  statute : 

"Commerce  means  commerce  among  the  several  States 
or  with  foreign  nations,  or  in  any  Territory  of  the  United 
States  or  in  the  District  of  Columbia,  or  between  any  such 
Territory  and  another  or  between  any  such  Territory  and 
any  State  or  foreign  nation,  or  between  the  District  of 
Columbia  and  any  State  or  Territory  or  foreign  nation." 

The  definition  in  Section  I  of  the  Clayton  Law  is  of  the  same 
tenor,  excepting  that  it  includes  "trade  or  commerce,"  and  the 
scope  of  commerce  involved  in  the  regulating  statute  is  extended 
to  "any  insular  possession  or  other  places  under  the  jurisdiction 
of  the  United  States  *  *  *  Provided  that  nothing  in  this 
Act  shall  apply  to  the  Philippine  Islands." 

Comparison  of  these  provisions  with  the  terms  of  Sections  i, 
2,  and  3  of  the  Sherman  Law,  discloses  at  a  glance  that  the  juris- 
diction under  the  Federal  Trade  Commission  Act  is  tantamount 
to  that  under  the  Sherman  Law,  so  that  the  preventive  statute 
covers  the  same  area  as  the  punitive  law;  whereas  protection 
against  price  discrimination,  "tying"  or  conditional  contracts, 
control  of  competing  corporations  by  stock-ownership,  and  the 
various  other  features  of  the  Clayton  Law  extend  to  the  limits 
of  the  entire  region  under  protection  of  our  flag,  excepting  only 
the  Philippine  Islands.  What  significance  this  distinction  in  jur- 


SHERMAN  ANTI-TRUST  LAW.  93 

isdiction  was  intended  to  possess,  or  whether  it  was  merely  de- 
sired to  restrict  the  extent  to  which  the  administrative  duties  of 
the  Commission  should  be  exercised  at  the  inception  of  the  plan 
embodied  in  the  creating  act,  will  appear  when  its  policy  is  de- 
veloped in  practice.  As  the  limits  of  these  statutes  are  the  same, 
it  may  also  have  been  intended  to  utilize  the  Commission  to  pre- 
clude the  necessity  for  future  litigations  under  the  Sherman  Law ; 
certainly  the  issuance  of  restraining  orders  requiring  the  defend- 
ant to  cease  and  desist  from  "unfair  methods  of  competition  in 
commerce  *  *  *  if  it  shall  appear  to  the  Commission  that  a 
proceeding  in  respect  thereof  would  be  to  the  interest  of  the  pub- 
lic," appears  to  fit  in  well  with  this  theory, — due  regard  being 
had  to  the  well-defined  policy  of  treating  as  state  trials  previous 
prosecutions  under  the  Sherman  Law. 

Sections  i  and  2  of  Sherman  Law  are  Generally  Construed 
together. — In  those  prosecutions,  Sections  I  and  2  are  very  gen- 
erally regarded  as  dual  only  to  the  extent  that  Section  I  relates  to 
individual  attempts  to  restrain  trade,  etc.,  whereas  combinations 
of  two  or  more  persons,  firms  or  corporations  are  covered  by  the 
ensuing  section.  The  distinction  is  obvious  and  is  repeatedly  no- 
ticed in  the  decisions,  where  these  sections  are  usually  construed 
together  so  as  to  include  infractions  of  the  statute  by  either 
method. 

Construction  and  Application  now  Settled  Law. — The  law 
in  connection  with  the  enforcement  of  Sections  i  and  2  of  the 
Sherman  Law  has  been  so  completely  settled  by  the  Northern  Se- 
curities case,  the  Standard  Oil  and  Tobacco  prosecutions  and  by 
the  success  of  the  government  in  proceedings  against  the  Union 
Pacific  Railroad  and  International  Harvester  Company25  (the 
last-named  decision,  however,  being  subject  to  review  by  the  Su- 
preme Court  in  the  pending  appeal),  that  discussion  of  the  rul- 
ings upon  those  provisions  does  not  seem  warranted.  Suffice  it 
to  say  that  trusts,  monopolies  and  combinations  in  restraint  of 
trade  or  commerce  have  been  adjudged  unlawful,  when  the  effect 
is  to  restrict  the  flow  of  traffic  and  trading  which  normal  condi- 
tions of  competition  would  otherwise  create  and  maintain. 

25  Standard  Oil  Co.  v.  U.  S.  221  U.  S.  i ;  U.  S.  v.  American  Tobacco 
Co.,  221  U.  S.  66  U.  S.  v.  Union  Pacific  Rd.,  226  U.  S.  306;  U.  S.  v.  Int. 
Harvester  Co.,  214  Fed.  987. 


94  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

15.  CONGRESS  SUPPLEMENTS  ANTI-TRUST  DECISIONS. 

Purpose  in  Strengthening  Anti-trust  Laws. — Attention  is 
again  directed  to  the  controlling  purpose  in  the  strengthening  of 
Anti-trust  legislation  through  the  enactment  of  the  Federal  Trade 
Commission  Act  and  Clayton  Law.  That  purpose  can  be  none 
other  than  to  prevent,  rather  than  to  combat,  the  evils  growing 
out  of  monopolistic  conditions.  The  long  warfare  waged  by  the 
government  against  the  skillfully  entrenched  forces  of  trusts — 
grown  strong  and  self-endowed  with  resources  of  wealth  and 
talent — has  been  a  feature  in  the  history  of  our  times.  The  re- 
mark by  Mr.  Culberson,  a  leading  member  of  the  House  of  Rep- 
resentatives, during  the  able  debate  that  preceded  the  enactment 
of  the  Sherman  Law:  "I  believe  it  will  [afford  adequate  relief], 
if  it  is  construed  as  we  think  it  ought  to  be  construed  by  the 
courts" — stands  justified  by  the  outcome  thus  far  in  the  progress 
of  Anti-trust  affairs. 

Legislation— Supplements,  Court  Rulings. — The  result  has 
been,  on  the  whole,  favorable  to  the  people;  and  Congress  has 
seen  fit  to  supplement  this  success  by  laws  that  by  positive  enact- 
ments extend  Anti-trust  influence  and  regulation  into  fields 
preventive  as  well  as  curative.  These  appear  in  the  chapters  al- 
ready devoted  to  the  Federal  Trade  Commission  Act,  and  Clay- 
ton Law. 

The  debates  that  attended  the  passage  of  the  Sherman  Act  are 
worthy  of  careful  study  in  this  connection.20  Many  features  are 
explained  in  the  debates  in  the  Sixty-second  Congress  in  connec- 
tion with  the  proposed  Interstate  Trade  Commission  Law  of 
1912.  This  is  presented  very  fully  in  Appendix  M,  pages  304-334. 

Sections  4  to  8  Considered. — Sections  4  and  5  of  the  Sherman 
Law  confer  jurisdiction  in  equity  upon  the  several  circuit  courts 
(since  succeeded  by  the  district  courts),  in  government  suits 
brought  to  enforce  the  statutory  provisions. 

Section  6  provides  for  forfeiture  of  goods  which  are  con- 
cerned in  such  infractions,  when  in  transit  from  one  State  to  an- 
other, or  to  a  foreign  country. 

Section  7  affords  threefold  damages  for  any  person  injured  in 
his  business  and  property,  and  grants  in  addition  the  costs  of 
court  and  a  reasonable  attorney's  fee. 

26  For  account  of  this  notable  discussion,  occurring  at  the  inception  of 
Anti-trust  legislation,  see  pages  74-77,  ante. 


SHERMAN  ANTI-TRUST  LAW.  95 

Section  8  provides  that  "the  words  'person'  or  'persons'  where- 
ever  used  in  this  act  shall  be  deemed  to  include  corporations  and 
associations  existing  under  or  authorized  by  the  laws  of  either  the 
United  States,  the  laws  of  any  of  the  Territories,  the  laws  of  any 
State,  or  the  laws  of  any  foreign  nation."  This  section  is  very 
comprehensive  and  the  definition  includes  firms,  individuals  and 
associations,  together  with  corporations  of  every  description. 

With  the  exception  of  Sections  i  and  2,  these  provisions  are 
self-explanatory  and  will  not  receive  attention  which  should  be 
reserved  for  those  topics  which  still  require  our  careful  consid- 
eration. 


CHAPTER  IX. 

DEFINITIONS  OF  PERSON  AND  CORPORATION  AND 
EXTENT  OF  (i)  INDIVIDUAL,  (2)  CORPORATE 
LIABILITY,  UNDER: 

1.  Federal  Trade  Commission  Act. 

2.  Clayton  Law. 

3.  Sherman  Law. 

General  Comment. — In  way  of  introduction  to  this  depart- 
ment of  our  subject,  it  may  be  well  to  note  that  the  Federal  Trade 
Commission  Act  is  not  enumerated  in  the  list  of  the  Anti-trust 
acts.  Section  4  enumerates  the  Sherman  Anti-trust  Law,1  and 
sections  73  to  77,  as  amended,  of  the  Wilson  Tariff  Law  ;2  while 
Section  i  of  the  Clayton  Law  adds  that  statute  to  the  number. 
By  reasonable  deduction  it  seems  to  have  been  the  legislative  in- 
tent to  create  the  Federal  Trade  Commission  with  its  distinctive 
functions  of  enforcing  the  Anti-trust  laws  in  their  application  to 
general  business,  and  to  some  phases  of  the  matters  connected 
with  common  carriers  and  banks;  and  to  accomplish  this  pur- 
pose, the  Federal  Trade  Commission  has  been  endowed  with 
judicial  powers  and  duties,  suited  to  the  task  before  it.  This 
law,  accordingly,  is  not  an  Anti-trust  law;  and  the  Commission 
is  an  instrument  provided  by  law  and  superimposed  upon  that 
legislation,  to  render  effective  the  preventive,  administrative  and 
curative  features  of  the  Anti-trust  laws. 

In  exact  accord  with  and  in  furtherance  of  this  policy  the  def- 
inition of  "corporation"  in  Section  4  of  the  Federal  Trade  Com- 
mission Act  is  given  a  very  wide  signification,  which  includes 
every  form  of  combination  except  partnerships.  The  still  broader 
definition  of  "corporation"  contained  in  the  Sherman  Law,  Sec- 
tion 8,  reappears  in  the  Clayton  Law,  Section  i, — doubtless  because 
the  Clayton  Law  is  in  effect  and  in  legislative  intent  an  amend- 
ment of  the  Sherman  Law.  At  the  very  least  it  is  as  the  title 
states  a  "supplement"  thereof.  This  definition  appears  in  both 
statutes,  under  the  word  "person,"  and  is  as  follows : 

"The  word  'person'  or  'persons'  wherever  used  in  this 
act  shall  be  deemed  to  include  corporations  and  associa- 

1  For  text,  see  Appendix  C,  pages  279-281. 

2  See  Appendix  D,  pages  282,  283. 

96 


EXTENT  o£  INDIVIDUAL  AND  CORPORATE  LIABILITY.         97 

tions  existing  under  or  authorized  by  the  laws  of  either  the 
United  States,  the  laws  of  any  of  the  Territories,  the  laws 
of  any  State,  or  the  laws  of  any  foreign  country. 

It  therefore  will  appear  plainly  that  while  the  definition  under 
the  Federal  Trade  Commission  Act  is  broad,  the  limits  contained 
in  the  wording  of  the  Sherman  Law  and  Clayton  Law  present  a 
still  wider  circk  of  meaning.  There  can  be  no  doubt  as  to  the 
signification  of  the  language  in  the  Sherman  Law,  for  the  word 
"corporation"  occurs  only  in  the  definition  itself. 

The  distinction  in  meaning  is  important,  and  must  be  constantly 
borne  in  mind.  In  the  Clayton  Law  and  the  Sherman  Law  "per- 
son" equals  and  includes  "corporation,"  as  well  as  individuals. 
On  the  other  hand,  the  Federal  Trade  Commission  Act,  by  giving 
a  distinctive  definition  to  the  word  "corporation,"  wherein  no 
mention  is  made  of  "person,"  and  wherein  partnerships  are  spe- 
cifically excepted — confines  its  verbal  circumference  to  the  usual 
and  customary  scope  of  the  word  "corporation"  in  other  connec- 
tions. 

In  brief,  in  the  Clayton  Law  and  Sherman  Law  "person"  in- 
cludes "corporation,"  unless  the  application  is  limited  els-ewhere 
in  the  former  statute ;  whereas,  in  the  Federal  Trade  Commission 
Act  "person"  is  distinct  from  and  does  not  include  "corporation," 
but  on  the  contrary  retains  the  accustomed  meaning  of  an  indi- 
vidual entity  in  contradistinction  to  an  associated  or  aggregate 
body. 

i.  FEDERAL  TRADE  COMMISSION  ACT. 
a.  Individual  Liability. 

Nature  of  Statute,  Described. — Under  the  provisions  of  Sec- 
tion 5  of  this  statute,  the  Commission  is  empowered  to  prevent 
"persons,  partnerships,  or  corporations,  except  banks  and  common 
carriers"  from  using  unfair  methods  of  competition.  In  this  con- 
nection there  should  again  be  noted  the  use  of  the  word  "persons" 
as  distinct  from  "corporations" ;  for  under  the  definitions  in  the 
Sherman  Law,  and,  unless  qualified,  in  the  Clayton  Bill  as  well, 
the  word  "persons"  is  inclusive  of  "corporation."  Since  cor- 
porated  bodies  can  act  only  through  their  officers  or  agents,  con- 
tempts and  penalties  are  prescribed  and  directed  against  those  in- 
dividuals, to  make  that  power  effective.  But,  as  has  already 
been  stated,  Chapter  III,  the  Federal  Trade  Commission  in  the 
7 


98  MANUAL  o*  FEDERAL  TRADE  COMMISSION. 

main  is  directed  toward  the  establishment  of  a  court  or  tribunal 
for  correcting  abuses  growing  out  of  unfair  trade.  In  this  respect 
it  differs  from  the  Clayton  Law.  The  courts  can  enforce  the  rights 
conferred  on  the  Commission  by  the  former  act ;  but  those  rights 
can  be  exercised  and  the  corresponding  proceedings  initiated  only 
by  the  Commission,  in  the  first  instance.  Its  visitorial  powers  ex- 
tend only  to  corporations.  Accordingly,  obedience  to  "cease  and 
desist"  orders  and  to  directions  to  testify,  etc.,  is  the  essential 
liability  individuals  incur  thereunder. 

b.  Corporate  Liability. 

Corporate  Responsibility  Incurred  in  Connection  With  In- 
vestigations and  Reports. — In  the  Federal  Trade  Commission 
Act  (Section  4,  paragraph  2),  corporation  is  defined  as  any  com- 
pany or  association,  incorporated  or  unincorporated,  and  with  or 
without  shares,  which  is  organized  to  carry  on  business  for  profit, 
except  partnerships.  As  has  been  specifically  pointed  out  in 
Chapter  V,  the  distinctive  feature  of  the  rights  of  the  Commis- 
sion under  its  creating  act,  is  the  limitation  to  the  exercise  of  those 
rights  only  by  "a  proceeding  *  *  *  to  the  interest  of  the 
public."  The  Commission  will  necessarily  require  some  written  or 
sworn  statement  as  the  foundation  for  setting  its  powers  in  mo- 
tion ;  and  while  the  courts  would  not  assume  the  responsibility  of 
directing  favorable  or  unfavorable  action,  it  is  altogether  probable 
the  courts  by  mandamus  would  compel  it  to  exercise  its  discretion 
and  elect  whether  it  will  become  active  in  a  given  instance.3  Acts 
of  individual  initiative  are  permitted  by  the  provisions  of  the  Clay- 
ton Law,  whereas  administrative  control  is  the  dominant  factor 
of  the  Federal  Trade  Commission  Act.  Careful  inspection  of 
Section  5  of  the  Federal  Trade  Commission  Act  will,  it  is  be- 
lieved, be  convincing  on  this  point ;  although  the  rules  and  pro- 
cedure adopted  by  the  Commission  may  modify  or  enlarge  this 
section  in  practice. 

The  general  investigating  power  over  corporations,  excepting 
banks  and  common  carriers,  expressed  in  Section  6,  contains  the 
essential  feature  of  the  act,  aside  from  the  definition  and  declara- 
tion of  its  powers  and  the  measures  for  their  enforcement,  con- 

3  The  requirements  of  application  to  institute  a  proceeding  appear  in 
Rule  II,  p.  232.  For  ruling  that  courts  will  compel  a  statutory  board  or 
commission  to  pass  upon  questions  within  its  jurisdiction  duly  submitted 
to  it  for  the  exercise  of  its  discretional  powers, — see  Interstate  Commerce 
Commission  v.  Humboldt  Steamship  Co.,  224  U.  S.  474. 


EXTENT  OF  INDIVIDUAL  AND  CORPORATE  LIABILITY.         99 

tained  in  Section  5  thereof.  In  brief,  Sections  5  and  6  contain  the 
picture;  the  remainder  is  mostly  framework  and  setting.  One 
prominent  element  in  this  somewhat  novel  phase  of  legislation  is 
the  fact  that  all  the  inquisitorial  powers  of  the  Trade  Commission 
enumerated  particularly  in  Section  6  are  directed  against  corpo- 
rations and  not  against  persons,  which  under  the  definition  in  this 
law  comprise  only  individuals.  The  right  to  proceed  against 
persons  as  authorized  in  the  statute  seems  in  the  main  intended 
to  provide  the  requisite  machinery  to  reach  and  inspect  such 
books,  papers  and  records  as  those  corporate  inquiries  of  neces- 
sity entail.  Cases  may  and  no  doubt  will  arise  where  disputes  will 
occur  respecting  the  ownership  and  legal  custody  of  those  docu- 
ments ;  and  in  those  instances  the  constitutional  limitations  con- 
tained in  the  fourth  amendment  regarding  searches  and  seizures, 
and  in  the  fifth  amendment  covering  self-incrimination  would  of 
course  apply. 

Taken  broadly,  and  considered  as  a  whole,  the  Federal  Trade 
Commission  appears  to  have  been  intended  by  Congress  to 
succeed  the  Bureau  of  Corporations4  so  far  as  its  powers  of 
inquisition  are  concerned,  but  joined  with  an  affirmative  right 
to  initiate  court  proceedings,  such  as  the  Bureau  never  possessed ; 
and  the  authority  to  demand  and  compel  the  production  of  docu- 
ments and  papers  is  an  incident  to  those  powers. 

2.  THE  CLAYTON  LAW. 
a.  Individual  Liability. 

Measure  Fills  a  Dual  Capacity. — This  statute  must  be  re- 
garded as  occupying  to  some  extent  a  dual  position.  As  an  amend- 
ment of  or  supplement  to  the  Sherman  Law,  it  partakes  of  that 
brevity  which  is  the  soul  of  drastic  legislation  as  well  as  of  wit. 
The  earlier  constitutions,  both  Federal  and  State,  set  forth  rules 
of  a  general  nature,  for  the  guidance  of  the  citizens,  leaving  to 
the  courts  or  the  several  legislative  bodies  the  functions  of  limit- 
ing, amplifying,  or  applying  the  rights,  powers  and  duties  therein 
enumerated  and  defined.  In  the  later  constitutions  the  tendency 
has  been  to  leave  less  latitude  to  the  institution  and  discretion  of 
courts  or  legislatures.  The  details  and  limitations  are  self-con- 
tained; and  the  only  functions  remaining  is  to  apply  the  con- 
stitutional decree.  Both  influences  are  traceable  in  the  Clayton 
Law. 

4  For  text  of  creating  provisions,  see  Appendix  E,  pages  284,  285. 


ioo  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

The  Sherman  Law5  is  distinctly  of  the  former  class.  The  lan- 
guage is  tense  with  meaning;  words  of  widest  scope  have  been 
chosen  throughout,  with  deliberate  intent,  and  to  a  certain  degree 
the  Clayton  Law  partakes  of  that  quality.  But  as  a  medium  of 
practical  use  and  application,  as  well  as  to  avoid  the  charge  of 
presenting  merely  a  counsel  of  perfection,  it  was  seen  that 
due  regard  must  be  had  to  the  means  at  command  to  make 
its  legal  machinery  effective.  Thus,  while  the  very  and  perhaps 
excessively  comprehensive  definition  of  "person"  contained  in 
the  Sherman  Law  is  retained  in  the  Clayton  Law,  there  are  places 
where  the  word  is  utilized  in  connections  that  cannot  possibly 
refer  to  other  than  individual  human  entities. 

Certain  Provisions  Specifically  Considered. — Section  2  of  the 
Clayton  Law  declares  price  discrimination  unlawful,  and  this 
practice  no  doubt  is  designated  as  one  instance  of  the  unfair  com- 
petition prohibited  by  Section  5  of  the  Federal  Trade-Commission 
Law ;  construing  the  two  statutes  together,  there  can  be  no  rea- 
sonable doubt  that  persons  and  partnerships  are  included  in  the 
inhibition. 

The  provision  of  Section  8  of  the  Clayton  Law  relates  to  inter- 
locking directorates  of  two  or  more  corporations.  The  word 
"person"  is  employed,  but  it  can  have  no  possible  meaning  here 
except  that  of  a  human  individual.  This  dual  meaning  is  in  some 
places  implied  rather  than  set  forth  in  distinct  phraseology.  No 
doubt  there  will  be  rulings  by  the  Commission  or  courts  which 
will  differentiate,  distinguish  and  point  out  the  true  significance, 
when  opportunities  for  adjustment  of  disputed  meanings  shall 
arise. 

The  provisions  contained  in  Sections  2,  3,  7,  and  8  of  the  Clay- 
ton Law  are  not  punishable  in  criminal  proceedings.  The  statute, 
Section  n,  affords  the  usual  means  of  enforcement  by  applica- 
tions to  courts,  where  "contempt"  can  be  shown. 

Statute  Creates  Personal  Liability  for  Individuals  Concerned 
in  Corporate  Crimes. — Any  violation  of  the  penal  provisions  of 
the  Anti-trust  laws  (which  includes  this  bill,  see  Section  i)  are 
by  Section  14  declared  to  be  deemed  the  deeds  of  the  individual 
directors,  officers,  or  agents  who  shall  have  participated  therein ; 
and  violations  of  Section  10,  regulating  interlocking  directorates 
between  common  carriers  and  construction,  supply  or  financial 

5  For  text,  see  Appendix  C,  pages  279-281. 


EXTENT  OF  INDIVIDUAL  AND  CORPORATE  LIABILITY.        101 

concerns,  are  likewise  freighted  with  trouble  for  the  individuals 
taking  part  therein,  with  the  additional  feature  that  "any  person 
who  shall,  directly  or  indirectly,  do  or  attempt  to  do  anything" 
along  the  prohibited  lines,  shall  be  equally  culpable.  In  this  in- 
stance, the  word  "person"  is  doubtless  mainly  directed  at  in- 
dividuals acting  in  some  accessory  capacity;  and  doubtless  there 
are  other  places  where  a  similar  signification  will  be  noted  when 
the  Clayton  Law  comes  to  be  enforced  in  connection  with  its  com- 
panion statute,  the  Federal  Trade  Commission  Act.  Of  this  much 
we  may  be  certain, — that  all  the  prohibitions  against  interlocking 
directorates  are  of  necessity  applicabl-e  to  individuals,  although  in 
terms  directed  against  certain  classes  of  incorporated  bodies. 

b.  Corporate  Liability. 

Responsible  for  Illegalized  Stock-Ownership. — In  Section  7 
it  is  made  unlawful  for  one  corporation  to  own  stock  in  a  com- 
peting concern,  or  to  own  shares  in  two  or  more  competing  com- 
panies. This  prohibition  of  stock-ownership  applies  only  to  cor- 
porations. In  contradistinction  to  Section  7,  however,  the  provi- 
sions of  Section  2,  Price  Discrimination ;  Section  3,  Tying  Con- 
tracts, and  Section  8,  Interlocking  Directorates,  apply  to  both  in- 
dividuals and  corporations;  but  no  criminal  penalties  are  pro- 
vided for  violations  of  any  of  these  four  sections. 

Acts  in  Violation  of  Anti-trust  Laws  Carry  Triple  Dam- 
ages.— Outside  of  and  beyond  the  deterring  influence  of  the  con- 
tempt proceeding  which  we  have  seen  may  be  instituted  in  cases 
of  infraction  of  Sections  2,  3,  7,  and  8,  there  exists  the  liability 
for  three-fold  damages.  Pursuant  to  the  provisions  of  Section  4, 
the  person  injured  may  sue  for  such  damages  in  any  district  court 
where  the  defendant  resides  or  has  an  agent,  and  may  recover 
"threefold  the  damages  by  him  sustained,  and  the  costs  of  suit, 
including  a  reasonable  attorney's  fee." 

Ownership  in  Non-Competitive  Stock  Company  Allowed. — 
Stock-ownership  by  corporations  for  investments,  or  in  subsidiary 
companies,  if  for  branches  or  extensions,  is  permitted,  where  the 
object  is  not  merely  to  gain  control  and  where  the  purpose  is  not 
otherwise  unlawful  or  tending  to  substantially  lessen  competition. 
Further  provisions  of  section  7  allow  common  carriers  to  own 
stock  in  branch  line  companies  upon  practically  similar  conditions ; 
also,  do  not  make  unlawful  any  stock  ownership  that  existed  at 
the  time  when  the  statute  went  into  effect. 


IO2  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

Final  Adjudication  in  Government  Proceeding  Prima  Facie 
Evidence ;  Statute  of  Limitations  Suspended. — Under  the  terms 
of  Section  5,  a  final  decree  in  any  criminal  prosecution  or  suit  in 
equity  brought  by  or  on  behalf  of  the  United  States  under  the 
Anti-trust  laws  shall  be  prima  facie  evidence  against  the  defend- 
ant, in  any  suit  or  proceeding  brought  by  another  party  against 
the  defendant  under  said  laws,  provided  the  contention  of  the 
government  was  successful  in  the  prior  action.  In  addition,  this 
section  declares  the  statute  of  limitations  inoperative  against 
private  claims  pending  government  suit  to  prevent,  restrain  or 
punish  violations  of  any  of  the  Anti-trust  laws. 

Interdiction  of  Joint  Interests  Between  Common  Carriers 
and  Supply,  Etc.,  Concerns. — Common  carriers  interlocking  in 
their  boards  of  directors  with  supply,  construction  and  financial 
companies  with  which  they  do  more  than  $50,000  in  volume  of 
business  in  any  one  year  are  by  Section  10  rendered  amenable  to 
regulation  by  the  Interstate  Commerce  Commission,  and  infrac- 
tion of  this  statutory  provision  is  made  punishable  by  criminal 
proceedings,  which  may  be  instituted  against  the  common  carrier 
corporation  as  well  as  against  its  directors,  agents,  managers  or 
officers.  The  fine  against  the  corporation  is  fixed  at  $25,000, 
while  the  maximum  penalty  for  the  individual  directors,  etc.,  is 
$5,000  fine  with  imprisonment  for  one  year.  By  Section  14,  the 
provision  that  authorizing  directors,  officers  or  agents  are  liable 
for  unlawful  corporate  acts  and  may  be  punished  in  criminal 
proceedings,  is  decreed  to  apply  generally  in  all  violations  of  any 
of  the  penal  provisions  of  the  Anti-trust  laws. 

Enforcement  Proceedings  Regulated  by  Section  u. — Corpo- 
rations are  subject  to  the  powers  and  process  of  the  respective 
commissions  and  the  Federal  Reserve  Board;  and  the  specific 
enactments  as  to  their  several  powers  and  authorities  and  the 
means  provided  for  the  orderly  application  and  enforcement 
thereof  will  in  general  be  found  in  Section  n  of  the  Clayton  Law 
The  procedure  is  set  forth  in  Chapters  IV  and  V,  to  which  refer- 
ence is  made  for  particular  information.  The  Rules  contained  in 
pages  232  to  235,  and  the  forms  appearing  in  pages  236  to  245 
should  also  be  consulted. 

Under  Sections  21  to  24,  Court's  Direction  Involves  Lia- 
bility to  Contempt  Proceedings. — While  the  district  courts  are 
authorized  by  Section  9  of  the  Commission  Act  to  issue  writs  of 


EXTENT  OF  INDIVIDUAL  AND  CORPORATE  LIABILITY.        103 

mandamus  commanding  and  compelling  any  person  or  corporation 
to  comply  with  any  provisions  of  that  statute  or  to  obey  the 
Commission's  orders,  there  is  no  equivalent  provision  in  the  Clay- 
ton Law.  Perhaps  the  fact  that  the  latter  law  is  included  in  the 
Anti-trust  legislation  and  has  the  severe  penal  provisions  asso- 
ciated with  laws  to  reach  misdemeanors  and  other  crimes,  may 
explain  the  discrepancy.  Instead  of  the  civil  writ  of  mandamus 
we  find  substituted  very  broad  provisions  contained  in  Sections 
21  to  24  inclusive,  authorizing  proceedings  for  semi-criminal  con- 
tempt. The  power  to  punish  covers  wilful  disobedience  of  "any 
lawful  writ,  process,  order,  rule,  decree  or  command  of  any  dis- 
trict court  of  the  United  States  or  any  court  of  the  District  of 
Columbia  by  doing  any  act  or  thing  therein  or  thereby  forbidden 
to  be  done  by  him,  if  the  act  or  thing  so  done  by  him  be  of  such 
a  character  as  to  constitute  also  a  criminal  offence  under  any 
statute  of  the  United  States,  or  under  the  laws  of  any  State  in 
which  the  act  was  committed";  such  offender  shall  be  "pro- 
ceeded against  for  his  said  contempt  as  hereinafter  provided." 
The  defendant  is  entitled  to  notice,  and  to  a  jury  trial,  if  de- 
manded by  him;  a  review,  with  reasonable  bail,  is  another  pro- 
vision of  the  statute.  This  proceeding,  however,  must  not  be 
confounded  with  the  right  to  enforce  obedience  in  suits  or  ac- 
tions instituted  by  the  United  States ;  or  to  contempts  committed 
in  the  presence  of  the  court  or  so  near  thereto  as  to  amount  to  an 
obstruction  of  the  administration  of  justice.  Pursuant  to  Sec- 
tion 24,  these  offences  continue  punishable  in  summary  manner 
in  conformity  to  the  usages  at  law  and  in  equity. 

Any  corporation  which  fears  a  threatened  loss  or  damage  by 
any  violation  of  the  Anti-trust  laws  may  have  injunctive  relief, 
in  a  proper  case  (Sections  16  to  20,  inclusive).  What  constitutes 
a  proper  case  with  the  particulars  of  procedure  the  law  prescribes 
will  appear  in  Chapter  X,  which  is  devoted  to  a  discussion  of 
"Injunctions  and  Contempt  Proceedings  Under  the  Federal  Trade 
Commission  Act  and  Clayton  Law." 

3.  LIABILITY  UNDER  THE  SHERMAN  LAW. 

In  General. — While  it  is  not  intended  at  this  place  to  enter 
fully  into  the  discussion  of  the  scope  and  effectiveness  of  the 
Sherman  Law,  since  it  has  received  particular  attention  at  another 
place  (Chapter  VIII),  still  some  remarks  will  without  doubt  be 


IO4  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

useful  in  regard  to  the  question  of  where  and  when  the  liability 
for  prohibited  acts  ensues. 

In  this  connection,  it  may  be  well  to  call  attention  to  the  fact 
that  the  Clayton  Law  is  in  effect  an  amendment  of  the  Sherman 
Law,  and  is  by  its  terms  as  expressed  in  its  title,  declared  to  be 
supplementary  to  the  "existing  laws  against  unlawful  restraint 
and  monopolies,"  i.  e.,  to  the  laws  commonly  known  and  occa- 
sionally described  in  the  statute  themselves  (see  Clayton  Law, 
Section  i)  as  the  Anti-trust  acts. 

It  is  one  feature  of  the  history  of  legislation  in  a  republic  that 
laws  of  a  nature  declarative  of  individual  rights,  with  the  avowed 
intention  of  protecting  the  ordinary  citizen  in  his  business  or  pro- 
fession, are  always  progressive ;  and  later  statutes  explain,  apply 
and  generally  broaden  out  the  application  of  the  initial  enactment. 
In  a  monarchy  or  autocracy,  the  powers  of  the  Duma  or  other 
legislative  body  may  be  seriously  curtailed,  or  the  semi-inde- 
pendent constitutional  rights  of  Finland  or  other  principality  may 
be  cut  down;  but  under  a  democracy  the  people  are  granted  or 
rather  demand  and  take  over  additional  powers  and  interests  in 
the  government,  until  what  at  first  was  esteemed  a  privilege  has 
grown  into  an  acknowledged  right.  The  saying  of  Jefferson, 
"The  cure  for  the  ills  of  democracy  is  found  in  more  democracy," 
may  not  appeal  to  statesmen  and  it  may  be  opposed  in  party  plat- 
forms and  ideals;  but  the  fact  remains  that  the  wheels  of  the 
political  machine  appear  to  revolve  only  in  one  direction  in  a  re- 
public. 

a.  Individual  Liability. 

Language  of  Sherman  Law  Extremely  Condensed. — Apply- 
ing the  principles  enumerated  above  to  the  work  at  hand,  it  may 
be  said  without  fear  of  serious  contradiction  that  nowhere  in  the 
Revised  Statutes  at  Large  is  there  more  condensed  meaning  than 
is  contained  in  the  eight  brief  sections  that  together  make  up  the 
Sherman  Law.  It  seems  to  have  been  the  Congressional  intent 
to  weigh  every  word,  and  to  give  every  portion  of  the  law  the 
same  attention  and  thought  which  would  ordinarily  be  reserved 
for  a  provision  of  the  Constitution  itself. 

Joint  Restraints  of  Trade  Illegal. — For  statute  in  full,  see 
pages  279-281.  Section  i  deals  with  contracts,  combinations  and 
conspiracies  in  restraint  of  trade  or  commerce.  It  relates  to  and 
declares  illegal  every  form  of  executory  agreement  and  under- 


EXTENT  OF  INDIVIDUAL  AND  CORPORATE  LIABILITY.        105 

standing,  and  it  is  especially  aimed  at  industrial  trusts  and  trade 
agreements  between  independent  concerns,  or  competitive  in- 
terests. 

Sherman  Law  Reinforced  by  Clayton  Law. — The  prohibi- 
tion, however,  is  directed  solely  against  acts  "in  restraint  of 
trade" ;  it  is  plain  that  acts  of  competition  in  aid  of  securing  or 
enlarging  trade  or  commerce — short  of  a  monopoly — are  not  in- 
tended to  be  proscribed.  This  fact  is  ably  presented  in  Thorn- 
ton's work,  "The  Sherman  Anti-trust  Act,"  pages  308-9;  but 
much  of  the  reasoning  and  necessarily  a  portion  of  the  deductions 
drawn  are  rendered  obsolete  in  view  of  the  preventive  legislation 
contained  in  Sections  2,  3,  7  and  8  of  the  Clayton  Law,  wherein 
and  whereby  price  discrimination,  tying  contracts,  corporate  stock 
ownership  in  competing  corporations,  and  interlocking  director- 
ates are  declared  to  be  unlawful  acts.  This  interdiction  of  "the 
very  appearance  of  evil"  is  specific,  and  therefore  outside  the  scope 
of  judicial  rulings  and  the  deliberations  of  text-writers  upon  the 
matter  and  measure  of  the  nature  and  the  class  of  acts  intended  to 
be  interdicted  by  the  Anti-trust  laws.  Reaching  back  of  and  be- 
neath the  physical  results  of  the  desire  to  deal  unfairly,  the  new 
legislation  seeks  to  remove  the  condition  out  of  which  the  occa- 
sions for  such  unfair  actions  would  flow.  Such  is  the  intent  of 
Congress ;  as  to  its  practical  effects  or  the  manner  and  extent  to 
which  it  is  applied  by  the  Federal  Trade  Commission  or  construed 
by  the  courts, — these  are  matters  that  rest  as  yet  in  the  lap  of  the 
gods. 

There  can  be  no  question  that  Section  I — and  the  supple- 
mentary matter  contained  in  Sections  2,  3,  7,  and  8  of  the  Clay- 
ton Law — involve  the  fullest  degree  of  personal  liability,  except  in 
so  far  as  Section  7  of  the  Clayton  Law  refers  exclusively  to  cor- 
porate acts. 

Monopolies,  Whether  by  Combinations  or  Individuals, 
Prohibited. — Section  2  of  the  Sherman  Law  is  directed  especially 
at  monopolies,  which  may  be  conducted  by  single  persons,  or  cor- 
porations, or  firms ;  whereas  the  provisions  of  Section  I  require 
a  combination  or  conspiracy,  and  this  of  course  involves  joint 
action  by  two  or  more  persons  or  concerns.  So  that  while  one 
person  may  offend  against  the  second  section  by  monopolizing 
acts,  the  first  section  contemplates  and  is  directed  against  conduct 
of  two  or  more.  The  comments  upon  the  occasion  for  and  the 
objects  sought  to  be  accomplished  by  the  provisions  of  Section  I 
apply  with  equal  force  here. 


io6  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

Section  3  specifies  Territories,  etc.,  as  localities  where  the  act 
applies,  and  declares  illegal  every  contract,  combination  or  trust 
in  the  prohibited  class. 

The  provisions  of  Section  4  confer  jurisdiction  for  enforce- 
ment upon  the  United  States  circuit  courts, — now  merged  in  the 
district  courts, — and  Section  5  extends  to  every  district  the  right 
to  serve  summons  and  subpoenas. 

The  right  to  condemn  property  in  course  of  transportation, 
owned  in  violation  of  Section  I,  is  contained  in  Section  6. 

Criminal  Jurisdiction  Extended  by  Clayton  Law. — This 
section  concludes  the  penal  provisions  of  the  Sherman  Law.  Their 
application  to  individuals  has  been  very  much  extended  by  Sec- 
tion 14  of  the  Clayton  Law  which  makes  a  violation  by  a  corpora- 
tion also  the  act  of  its  directors,  officers  and  agents  consenting 
thereto.  This  enlargement  applies  to  any  penal  provision  of  the 
Anti-trust  laws.  The  somewhat  familiar  spectacle  of  an  infrac- 
tion of  these  laws  followed  by  a  fine  imposed  upon  the  perhaps 
already  injured  or  impaired  corporate  body,  is  not  henceforth  to 
constitute  the  only  penalty.  These  penal  features,  however,  have 
their  own  allotted  place,  Chapter  XII,  and  only  brief  mention  will 
be  made  of  them  in  passing. 

Word  "person"  has  Wide  Application  here. — It  should  be  re- 
membered that  under  the  Sherman  Law  a  very  broad  definition 
of  the  word  "person"  applies,  and  that  wherever  that  word  is 
found  it  must  be  deemed  to  include  not  only  individuals  and  firms, 
but  also  corporations  and  associations  under  the  laws  of  the 
United  States,  or  of  any  Territory,  State  or  foreign  country. 

Enforcement  by  Contempt  Proceedings  Allowed. — Contempt 
proceedings  are  permitted  under  Section  21  of  the  Clayton  Law, 
wherever  the  disobedience  of  the  order  constitutes  a  criminal  of- 
fence under  the  laws  of  the  United  States,  or  of  any  State.  Such 
designation,  of  course,  includes  infractions  of  the  Sherman  Law. 
Such  contempt  actions  are  subject  to  jury  trial;  and  must  be 
instituted  within  one  year.  Construing  Section  14  of  the  Clayton 
Law  in  connection  with  the  penal  provisions  of  the  Sherman  Law, 
it  seems  probable  that  contempt  actions  would  lie  against  directors 
of  corporations  charged  with  violations  thereof,  or  with  similar 
infractions  of  any  penal  provision  of  the  Anti-trust  laws. 

Some  Compensating  Rights  Are  Conferred. — As  some  com- 
pensation for  these  increased  severities,  the  amendatory  features 


EXTENT  OF  INDIVIDUAL  AND  CORPORATE  LIABILITY.        107 

of  the  Clayton  Law  enlarge  the  scope  of  the  rights  of  individuals, 
under  the  Sherman  Law.  Injunctions  under  Section  4  of  the 
Sherman  Law  may  be  granted  by  a  United  States  court  of  equity 
as  the  suit  of  the  government;  and  a  similar  right  exists  under 
Section  15  of  the  Clayton  Law.  But  in  addition  thereto,  any  per- 
son, firm,  corporation,  or  association  has  like  rights,  provided  an 
injunction  bond  is  filed  and  the  requirements  of  Sections  16  to  20 
are  complied  with.  The  right  to  enforce  the  provisions  of  the 
Clayton  Law  contained  in  Section  2,  price  discrimination,  Section 
3,  tying  contracts,  Section  7,  corporate  stock  ownership,  and  Sec- 
tion 8,  interlocking  directorates,  under  S-ection  n  thereof,  also 
extends  individual  rights  of  initiative  into  the  jurisdictions  of  the 
Interstate  Commerce  Commission  and  the  Federal  Reserve  Board. 
Right  to  Litigate  Enlarged. — On  the  other  hand  this  enlarged 
capacity  to  sue  carries  with  it  an  enlarged  field  of  litigation 
wherein  the  allegations  of  the  complaining  parties  must  be  met 
and  combatted ;  and  to  this  extent  the  Clayton  Law  may  be  said 
to  have  increased  the  liability  of  individuals  under  the  Sherman 
Law  and  the  other  Anti-trust  statutes.  The  phraseology  of  the 
Sherman  Law  is  so  condensed  that  it  seems  more  satisfactory  to 
quote  than  to  attempt  to  abbreviate  it.  Section  7  is  as  follows : 

"Any  person  who  shall  be  injured  in  his  business  or 
property  by  any  other  person  or  corporation  by  reason  of 
anything  forbidden  or  declared  to  be  unlawful  by  this  act 
may  sue  therefor  in  any  circuit  [district]  court  of  the 
United  States  in  the  district  in  which  the  defendant  re- 
sides or  is  found,  without  respect  to  the  amount  in  con- 
troversy, and  shall  recover  threefold  the  damages  by  him 
sustained,  and  the  cost  of  suit,  including  a  reasonable  at- 
torney's fee." 

It  is  incorporated  in  almost  exact  words  in  Section  4  of  the 
Clayton  Law. 

The  right  to  pursue  a  defendant  into  another  district  than  that 
in  which  he  or  it  resides,  permitted  at  the  instance  of  the  govern- 
ment in  Section  5  of  the  Sherman  Law,  is  granted  to  every  liti- 
gant when  the  defendant  is  a  corporation,  provided  it  can  be 
found  or  transacts  business  therein.  The  rule6  that  Section  5  of 
the  Sherman  Law  does  not  apply  to  actions  to  recover  damages 

6  Greer,  Mills  &  Co.  v.  Stoller,  77  Fed.  i. 


ro8  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

under  Section  7  thereof,  is  continued  in  the  Clayton  Law;  and 
Section  13  accordingly  permits  subpoenas  to  run  into  any  district 
only  where  the  United  States  is  the  moving  party  under  the  Anti- 
trust law. 

Triple  Damage  Rights  Also  Enlarged. — In  one  particular  the 
liability  of  the  Sherman  Law  is  largely  increased  for  individuals. 
The  threefold  measure  of  damages  is  extended  by  the  inclusion 
in  the  Clayton  Law  of  the  acts  prohibited  by  Section  2,  price  dis- 
crimination, Section  3,  tying  contracts,  Section  7,  corporate  stock 
ownership,  and  Section  8,  interlocking  directorates.  Probably 
Section  4  of  the  Clayton  Law  includes  rights  of  actions  for  dam- 
ages arising  from  interlocking  directorates  between  common  car- 
riers and  financial  or  supply  houses,  in  the  improbable  event  that 
such  damages  can  be  legally  proven ;  for  Section  4  covers  injuries 
"by  reason  of  anything  forbidden  in  the  Anti-trust  laws." 

Definitions  of  "Person"  Compared. — The  final  provision  of 
the  Sherman  Law,  Section  8,  is  as  follows : 

"The  word  "person"  or  "persons"  used  in  this  act  shall 
be  deemed  to  include  corporations  and  associations  exist- 
ing under  or  authorized  by  the  laws  of  either  the  United 
States  or  the  laws  of  any  of  the  Territories,  the  laws  of 
any  State  or  the  laws  of  any  foreign  country." 

Attention  has  been  already  called  to  the  use  of  similar  defining 
words  in  the  equivalent  provision  contained  in  Section  i  of  the 
Clayton  Law;  though  in  the  latter  statute  the  word  "person"  is 
necessarily  confined  to  individuals  where  it  is  employed  in  pro- 
visions which  prescribe  the  rights  or  duties  of  members  of  boards 
of  directors,  or  incumbents  of  other  offices. 

The  definition  of  "corporation"  in  Section  4  of  the  Federal 
Trade  Commission  Law  is  an  effort  to  unload  from  the  word 
"person"  some  portion  of  this  burden  of  meaning  which  over- 
weights it  in  the  Sherman  and  Clayton  Laws.  Like  the  distances 
between  the  fixed  stars, — the  extent  of  space  involved  is  almost 
too  great  for  human  comprehension.  As  it  stands,  "person" 
when  employed  in  the  Sherman  Law  and  Clayton  Law  includes 
partnerships  and  unincorporated  associations  in  addition  to  bodies 
corporate,  and  every  class  of  individual  human  beings. 

b.  Liability  of  Corporations 

Subject  Matter  Treated  in  Last  Paragraph. — The  principal 


EXTENT  OF  INDIVIDUAL  AND  CORPORATE  LIABILITY.        109 

phases  of  this  department  of  our  topic  have  come  up  incidentally 
in  writing  of  individual  liability. 

Scope  of  Liability  Enlarged. — The  liability  to  prosecution 
has  now  been  extended  by  removal  of  the  limitations  prescribed 
in  the  leading  decision  upon  that  point  ;7  and  individuals  as  well 
as  the  government  may  now,  by  virtue  of  Section  16  of  the  Clay- 
ton Law,  institute  proceedings  in  equity  against  corporate  as  well 
as  other  defendants,  praying  for  injunctive  relief  against  "threat- 
ened loss  or  damage  by  a  violation  of  the  anti-trust  laws,  includ- 
ing Sections  2,  3,  7  and  8  of  this  [Clayton]  Act." 

Upon  the  law  side  of  the  court,  the  extent  of  the  liability  for 
three-fold  damages  recoverable  under  Section  7  of  the  Sherman 
Law,  has  been  greatly  increased  by  the  more  comprehensive 
terms  of  Section  4  of  the  Clayton  Law. 

Individual  Responsibility  for  Corporate  Acts. — Beside  the 
responsibility  of  defending  its  property  and  other  interests  along 
a  more  extended  line — a  responsibility  that  devolves  upon  the 
corporation  as  a  whole — the  individual  officer,  director  and  agent 
must  respond  where  his  acts  are  the  subject  of  complaint  under 
Section  14  of  the  Clayton  Law. 

Thus  it  is  apparent  that  under  this  new  legislation  a  revision 
of  former  methods  of  regulating  incorporated  bodies  is  intended, 
and  that  both  the  material  and  the  personal  sides  are  involved. 
In  brief,  this  new  dispensation  extends  in  manifold  directions ; 
and  in  each  quarter  there  is  need  for  study  by  those  who  have 
their  own  interests  and  those  of  the  corporation  at  stake,  when 
seeking  the  correct  solution  of  the  difficulty  that  confronts  them. 

Abuse  of  Chartered  Powers. — The  powers  of  joint  contribu- 
tion, and  of  concealment,  so  readily  at  command  under  the  legal 
fiction  of  an  artificial  entity,  and  which  it  must  be  admitted  in  the 
last  analysis  supply  the  foundation  for  criticism  of  many  corpo- 
rate practices,  have  compelled  Congress  to  take  notice  of  this 
opportunity  for  abuse  of  chartered  powers. 

Old  Remedies  Applied  by  New  Methods. — In  brief,  the  Anti- 
trust laws  as  amended  and  supplemented  supply  a  new  method 
for  the  enforcement  of  old  doctrines, — a  method  which  looks  be- 
hind the  form  and  regards  mainly  the  substance,  and  places  the 

7  Minnesota  v.  Northern  Securities  Co.,  194  U.  S.  48;  Thornton's 
Sherman  Anti-trust  Act,  §  351. 


no  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

penal  and  civil  liability  upon  the  officer,  or  agent,  or  member  of 
the  directing  board. 

General  Result  Beneficial  to  Individuals. — To  this  extent  the 
Federal  Trade  Commission  Act  and  the  Clayton  Law  have  amend- 
ed and  supplemented  the  Sherman  Law  and  the  Anti-trust  laws 
in  general,  and  to  this  extent  the  liability  of  the  individual  has 
been  increased.  But  it  is  requisite  to  say  in  this  connection  that 
whatever  that  burden  may  prove  to  be  in  practice,  there  are  rea- 
sons to  believe  that  the  dignities  and  rights  of  citizenship  have 
been  enhanced  in  far  greater  measure  and  that  the  public  at  large 
will  benefit  in  future  by  its  ability  to  work  under  a  coherent  and 
efficient  plan,  provided  with  a  supervising  board  fully  empow- 
ered to  protect  the  individual  in  his  right  to  demand  and  require 
fair  methods  of  competition  in  commerce. 


CHAPTER  X. 

SUITS  FOR  INJUNCTION  UNDER  THE  FEDERAL 
TRADE  COMMISSION  ACT  AND  THE  CLAYTON 
LAW;  ALSO,  SPECIAL  CONTEMPT  PROCEED- 
INGS. 

1.  Importance  of  Subject  Considered. 

2.  Notice  in  Equity  Practice. 

3.  Practice  Revised. 

4.  Public  Interest  Conserved  under  Commission  Act. 

5.  Clayton  Law  Provisions. 

6.  Application  and  Hearing. 

7.  Order  Must  be  Specific. 

8.  Special  Limitations  in  Trade  Disputes. 

9.  Contempt  Proceedings  Where  Disobedience  Involves  Criminal  Act. 

10.  Old  Forms  of  Contempt  Retained. 

11.  Statutory  Limitation  One  Year;   Criminal  Proceedings  Not  Barred. 

i.  IMPORTANCE  OF  SUBJECT  CONSIDERED. 

i.  Right  to  Injunctive  Relief  Retained  and  Enlarged. — 
Despite  the  danger  of  appearing  to  state  a  mere  truism,  it  is 
necessary  to  call  attention  to  the  extreme  importance  of  the  sub- 
ject of  injunctive  relief.  Particularly  is  this  required  concerning 
a  newly  created  administrative  body  equipped  with  judicial  func- 
tions that  call  for  the  employment  of  restraining  orders  in  the 
performance  of  the  duties  committed  to  it  by  direct  legislation  or 
naturally  associated  with  its  allotted  sphere  of  action. 

While  in  numerous  directions  the  new  legislation  comprised  in 
the  Commission  Act  and  the  Clayton  Law  has  safe-guarded  public 
interests  and  extended  the  right  of  the  individual  manufacturer, 
trader  or  consumer  to  demand  fair  treatment  in  business,  in  no 
quarter  is  this  considerate  treatment  by  Congress  more  plainly 
evident  than  in  the  enlargement  of  the  individual's  right  to  seek 
injunctive  relief.  By  certain  important  decisions  construing 
Section  4  of  the  Sherman  Law,1  the  Supreme  Court  confined  to 

I  See  matters  referred  to  and  authorities  cited  in  Notes  3,  4  and  5.  For 
extracts  from  interesting  and  able  report  of  the  Senate  Judiciary  Commit- 
tee submitted  prior  to  the  enactment  of  the  Federal  Trade  Commission 
Act  and  Clayton  Law, — with  particular  reference  to  the  history  and  nature 
of  injunctions,  and  the  practice  in  application  to  courts  of  equity  when  in- 
junctive relief  is  sought, — see  Appendix  N,  pages  335-344,  post. 

Ill 


1 12  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

the  United  States  represented  by  the  Attorney  General  the  ex- 
clusive province  of  preventing  and  restraining  violations  of  the 
Anti-trust  laws,  to  the  complete  elimination  of  individuals  and 
even  States  as  suitors  seeking  to  correct  abuses  and  to  assert  the 
right  to  immediate  redress  through  proceedings  in  equity. 

In  view  of  the  infrequency  of  the  instances  where  popular 
rights,  once  extended,  have  afterward  been  withdrawn  or  even 
curtailed, — it  seems  unlikely  that  the  right  to  enforce  the  Anti- 
trust laws  through  suits  in  equity  will  be  again  confined  to  govern- 
ment control.  The  general  tenor  of  recent  legislation  on  this  sub- 
ject is  opposed  to  that  feature  of  Sherman  Law  practice;  and 
whatever  the  result  may  be,  the  road  to  redress  by  personal  initia- 
tive remains  open  to  every  real  or  artificial  person  who  feels  that 
he  or  it  is  or  may  be  oppressed  by  trade-restraint  or  some  other 
"unfair  method  of  competition  in  commerce."  Whether  the 
shorter  road  is  also  quicker  and  better,  is  something  which  the 
future  must  disclose. 

Certain  other  modifications  of  equity  practice  should  now  re- 
ceive attention. 

a.  NOTICE  IN  EQUITY  PRACTICE. 

Extent  of  Notice  Courts  of  Equity  Require. — At  the  incep- 
tion of  our  judiciary  system,  Congress  passed  the  Judiciary  Act 
of  1789,  containing  the  plan  outlined  by  Chief  Justice  Ellsworth, 
whereby  power  was  conferred  upon  the  courts  to  issue  injunctive 
writs,  including  writs  of  ne  exeat  in  accordance  to  legal  usages 
and  practice. 

This  statute  was  revised  in  1793,  and  the  foregoing  power  was 
confirmed,  but  with  the  limitation:  "No  injunction  shall  be  is- 
sued in  any  case  without  reasonable  previous  notice  to  the  ad- 
verse party  or  his  attorney." 

The  intent  of  the  law  was  plain ;  but  like  many  general  statutes 
its  terms  were  too  sweeping  to  permit  of  complete  justice  in  all 
cases.  In  practice  the  rule  was  substantially  modified  by  judicial 
constructions  holding  that  the  statutory  provision  did  not  cover 
situations  where  an  irreparable  injury  was  threatened.  In  a  lead- 
ing case  the  court  said : 

"Every  court  of  equity  possesses  the  power  to  mold  its 
rules  in  relation  to  the  time  of  appearing  and  answering 
so  as  to  prevent  the  rule  from  working  injustice,  and  it  is 


INJUNCTIONS  AND  CONTEMPT  PROCEEDINGS.  113 

not  only  in  the  power  of  the  court,  but  it  is  its  duty  to 
exercise  a  sound  discretion  upon  this  subject."2 

In  brief,  the  spirit  of  equity  jurisprudence  rendered  it  incom- 
patible for  the  court  to  issue  writs  or  orders  which  were  idle 
when  the  adverse  party  had  notice  and  an  opportunity  to  change 
the  situation  before  the  hearing;  and  therefore,  in  compliance 
with  substantial '  justice,  the  court  exercised  its  discretionary 
power  in  respect  to  requiring  prior  notice,  notwithstanding  the  re- 
strictive nature  of  the  prohibiting  words. 

In  this  manner  the  practice  became  less  broad  than  the  law; 
and  matters  continued  in  that  condition  down  to  the  general  re- 
vision of  1873.  The  clause  containing  the  provision  as  to  notice 
in  respect  to  injunctions  is  therein  made  to  conform  to  the  prac- 
tice, as  follows: 

"Whenever  notice  is  given  of  a  motion  for  an  injunc- 
tion out  of  a  district  court,  the  court  or  judge  thereof  may, 
if  there  appears  to  be  danger  of  irreparable  injury  from 
delay,  grant  an  order  restraining  the  act  sought  to  be  en- 
joined until  the  decision  upon  the  motion ;  and  such  order 
may  be  granted  with  or  without  security,  in  the  discretion 
of  the  judge  or  court."3 

3.  PRACTICE  REVISED. 

Practice  Regulated  by  Clayton  Law. — This  provision  is  spe- 
cifically repealed  by  paragraph  3  of  Section  17  of  the  Clayton 
Law.  In  its  place  an  amplified  system  of  injunctive  relief  is  set 
forth  in  Sections  15  to  19,  inclusive,  with  a  further  provision  in 
Section  20,  restricting  the  granting  of  injunctive  relief  in  disputes 
concerning  terms  or  conditions  of  employment. 

The  Federal  courts  are  also  granted  jurisdiction  to  enforce  the 
provisions  of  the  Sherman  Law,*  by  Section  4  thereof ;  and  a 
like  authority  is  conferred  by  Section  74  of  the  Wilson  Tariff 
Law,5  in  relation  to  combinations  and  contracts  in  restraint  of  im- 

2  Ex  parte  Poultnoy,  4  Peters  C.  C.  C.  472. 

3  Section  263  of  the  Judiciary  Code,  revision  of   1873 ;    continued  in 
effect  by  the  Judiciary  Act  of  1911;   repealed  by  Clayton  Law,  Section  17, 
paragraph  3. 

4  For  text,  see  Appendix  C,  pages  279-281. 

5  See  Appendix  D,  pages  282-3. 

8 


H4  MANUAL  of  FEDERAL  TRADE  COMMISSION. 

port  trade.  While  it  will  be  noted  that  such  writs  do  not  require 
security  and  are  not  circumscribed  as  to  the  prior  notice  required 
for  the  issuance  of  a  temporary  restraining  order,  those  statutes 
can  be  invoked  only  by  and  through  the  several  district  at- 
torneys under  the  direction  of  the  Attorney-General;  and  such 
proceedings  accordingly  do  not  come  within  the  scope  of  the  sub- 
ject of  personally  conducted  actions,  but  rather  pertain  to  admin- 
istrative prosecutions  on  behalf  of  the  government. 

Restraining  Orders  Will  be  Issued  in  the  Public  Interest. — 
Section  5  of  the  Federal  Trade  Commission  Law  confers  powers 
somewhat  similar,  in  that  in  proceedings  instituted  by  the  Com- 
mission in  accordance  with  the  purposes  of  its  creation,  that 
body  is  authorized  to  issue  and  cause  to  be  served  an  order  re- 
quiring the  defendant  "to  cease  and  desist  from  using  such  meth- 
ods of  competition,"  i.  e.,  unfair  methods  of  competition  in  com- 
merce. Any  person,  firm,  or  partnership  may  upon  application  be 
permitted  to  intervene ;  but  it  will  be  noted  that  this  law  does  not 
permit  any  private  party  to  become  the  complainant  in  the  proceed- 
ing, which  is  to  be  instituted  only  when  the  decision  of  the  ques- 
tion at  issue  "would  be  to  the  interest  of  the  public." 

The  ultimate  relief  is,  of  course,  an  order  of  an  injunctive  na- 
ture, and  is  reviewable  by  the  courts  upon  the  record  upon  which 
the  original  order  was  granted.  It  is  probable  that  the  power  to 
apply  for  mandamus,  contained  in  paragraph  4  of  Section  9,  re- 
lates to  these  orders  as  well  as  to  the  production  of  books,  papers, 
etc.,  required  in  the  course  of  investigations  by  the  Commission. 

4.  PUBLIC  INTERESTS  CONSERVED  UNDER  COMMIS- 
SION ACT. 

No  Preliminary  Injunction  Provided  for  under  Federal 
Trade  Commission  Act. — The  fact  that  these  proceedings  are 
only  instituted  by  the  Commission  itself,  and  then  only  in  matters 
where  the  public  interest  is  concerned,  prepare  us  for  the  absence 
of  any  provision  for  preliminary  injunctions  or  restraining  orders. 
No  such  power  exists  under  the  Federal  Trade  Commission  Act. 
The  law  creates  an  instrument  for  a  state  trial,  to  correct  a  pub- 
lic wrong,  with  the  right  on  the  Commission's  part  to  admit  pri- 
vate parties  as  interveners,  in  its  discretion.  The  minimum  of 
time  fixed  by  the  statute,  thirty  days  (Section  5),  of  itself  pre- 
vents any  summary  steps  to  restrain  an  existing  or  threatened  in- 
jury. 


INJUNCTIONS  AND  CONTEMPT  PROCEEDINGS.  115 

In  this  respect  the  Federal  Trade  Commission  Act  is  in  accord 
with  the  practice  laid  down  by  the  courts  in  their  construction  of 
Section  4  of  the  Sherman  Law.  No  private  person  is  authorized 
to  bring  an  action  for  injunctive  relief  under  that  section.  Even 
a  State  cannot  intrude  in  that  field  of  litigation  reserved  exclu- 
sively for  the  Federal  government.6 

No  doubt  it  was  the  legislative  intent  to  leave  actions  of  that 
nature  to  be  instituted  by  the  persons  concerned,  under  the  in- 
dividual rights  conferred  in  and  by  the  Clayton  Law,  whenever  in- 
dividual rights  under  the  protection  of  the  Anti-trust  acts  are 
invaded. 

5.  CLAYTON  LAW  PROVISIONS. 

Injunctive  Relief  under  Clayton  Law. — Returning  to  our 
consideration  of  the  provisions  for  injunctive  relief  substituted  in 
the  place  of  Section  263  of  the  Judicial  Code/  we  find  that  Section 
15  of  the  Clayton  Law  confers  jurisdiction  upon  the  United  States 
government  acting  by  the  several  district  attorneys,  to  obtain  com- 
plete injunctive  relief,  including  temporary  orders  of  a  restrain- 
ing nature.  Section  16  empowers  private  parties — 

"to  sue  for  and  have  injunctive  relief,  in  any  court  of  the 
United  States  having  jurisdiction  over  the  parties,  against 
threatened  loss  or  damage,  by  a  violation  of  the  Anti-trust 
laws,  including  Sections  2  [Price  Discrimination],  3  [Con- 
ditional on  "Tying"  Contracts],  7  [Stock  Ownership  in 
Competing  Corporations],  and  8,  [Stock  Ownership  by 
Holding  Companies]  of  this  act,  when  and  under  the  same 
conditions  and  principles  as  injunctive  relief  against  threat- 
ened conduct  that  will  cause  loss  or  damage  is  granted  by 
courts  of  equity,  under  the  rules  governing  such  proceed- 
ings, and  upon  the  execution  of  proper  bond  against  dam- 
ages for  an  injunction  improvidently  granted  and  a  show- 
ing that  the  danger  of  irreparable  loss  or  damage  is  imme- 
diate, a  preliminary  injunction  may  issue." 

6  Piddock  v.  Harrington,  64  Fed.  821 ;   Greer,  Mills  &  Co.  v.  Stoller,  77 
Fed.  i.    Minnesota  v.  Northern  Securities  Co.,  104  U.  S.  48,  2  Fed.  Anti- 
trust Dec.,  533.    Also  see  Thornton's  Sherman  Anti-trust  Act,  §  351,  page 
694,  etc. 

7  See  Appendix  I,  pages  291-3. 


1 16  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

The  ensuing  portion  of  the  section  prohibits  bringing  any  in- 
junctive  suit  against  a  railroad  in  matters  under  the  authority  and 
supervision  of  the  Interstate  Commerce  Commission.  Infraction 
of  the  Sherman  Law  by  railroads  and  other  common  carriers 
generally,  are  not  within  the  jurisdiction  of  the  Interstate  Com- 
merce Commission;  and  hence  such  combination  in  restraint  of 
trade  as  were  held  unlawful  by  the  Supreme  Court  in  the  Trans- 
Missouri  Freight  Association  case,8  would  be  subject  to  restraint 
by  injunction  by  private  parties ;  and  railroads  and  other  common 
carriers  could  presumably  be  enjoined  from  filing  with  the  Inter- 
state Commerce  Commission  rates  in  accordance  with  such  un- 
lawful agreement.  In  the  above-cited  case  it  was  squarely  held 
that  where  railroads  associated  themselves  together  for  the  pur- 
pose of  making  rates  by  agreement,  those  combinations  were  in 
restraint  of  trade,  and  constituted  violations  of  the. Sherman  Act. 

The  words,  "Anti-trust  laws,"  contained  in  the  foregoing  statu- 
tory provision  (Clayton  Law,  Section  16),  are  defined  in  Section 
i  of  said  law.  They  include  the  Sherman  Act ;  Sections  73  to  77, 
inclusive,  of  the  Wilson  Tariff  Law,  as  amended ;  and  the  Clayton 
Law  itself. 

Under  the  provisions  of  Section  16,  Congress  has  extended  to 
individuals  the  right  to  bring  actions  to  restrain  violations  of  the 
Sherman  Law.  No  doubt  this  broadening  of  the  means  for  en- 
forcing the  Anti-trust  statute  was  intended  to  nullify  the  rule  re- 
sulting from  certain  decisions9  and  authorities  cited,  restricting  to 
the  Attorney-General  the  right  to  bring  suits  in  equity  to  enjoin 
violations  thereof. 

In  addition  to  or  in  substitution  for  such  government-brought 
suits,  there  exists  the  right  of  the  Federal  Trade  Commission  to 
proceed  under  Section  5  of  the  creating  act,  whenever  it  deems  the 
public  interests  will  be  conserved;  and  power  to  admit  private 
individuals  to  intervene  in  such  governmental  proceedings  should 
and  no  doubt  will  in  practice  inure  to  the  benefit  of  private  par- 
ties, especially  since  by  Section  5  of  the  Clayton  Law,  every  final 
judgment  or  decree  in  any  criminal  prosecution  or  suit  in  equity 
brought  by  the  government  under  the  Anti-trust  Laws  becomes 

8  166  U.  S.  290. 

9  National  Fireproofing  Company  v.  Mason  Builders  Association,  169 
Fed.  259.    Even  a  state  cannot  institute  such  a  suit.    Minnesota  v.  North- 
ern Securities  Co.,  194  U.  S.  48,  decided  in  1904. 


INJUNCTIONS  AND  CONTEMPT  PROCEEDINGS.  117 

prima  facie  evidence  in  a  proceeding  instituted  by  any  other  party 
against  the  same  defendant  under  those  statutes. 

6.  APPLICATION  AND  HEARING. 

Requirements  as  to  Notice. — The  practice  with  regard  to  no- 
tice to  adverse  parties  is  in  substantial  accordance  with  the  recom- 
mendations by  President  Taft,  contained  in  his  message  to  Con- 
gress, dated  December  7,  1909,  to  the  effect  that  positive  enact- 
ments should  be  passed  regulating  the  issuing  of  injunctions,  and 
requiring  them  to  be  granted  only  on  notice, — 

"unless  it  shall  appear  to  the  satisfaction  of  the  court  that 
the  delay  necessary  to  give  such  notice  and  hearing  would 
result  in  irreparable  injury  to  the  complainant,  and  unless, 
also,  the  court  shall  from  the  evidence  make  a  written  find- 
ing, which  shall  be  spread  upon  the  court  minutes,  that  im- 
mediate and  irreparable  injury  is  likely  to  ensue  to  the 
complainant,  and  shall  define  the  injury,  state  why  it  is  ir- 
reparable, and  shall  also  endorse  on  the  order  issued  the 
date  and  the  hour  of  the  issuance  of  the  order.  *  *  * 
My  judgment  is  that  the  passage  of  such  an  act,  which 
really  embodies  the  best  practice  in  equity  and  is  very 
likely  the  rule  now  in  force  in  some  courts,  will  prevent 
the  issuing  of  ill-advised  orders  of  injunction  without  no- 
tice and  will  render  such  orders,  when  issued,  much  less 
objectionable  by  the  short  time  in  which  they  remain 
effective." 

The  final  recommendation  refers  to  the  suggestion  previously 
occurring  in  said  message,  that  the  injunction  or  restraining 
order,  when  granted  without  notice  or  hearing,  should  expire  by 
statutory  limitation  within  not  to  exceed  seven  days,  unless  the 
court  should,  upon  notice  and  hearing,  within  said  time  extend 
the  injunction  or  order. 

Recommendations  from  a  person  so  well  qualified  to  speak  au- 
thoritatively were  entitled  to  respect ;  and  the  requirements  of  the 
Clayton  Law  were  drawn  in  accordance  with  those  suggestions. 

By  the  provisions  of  Section  17, — 

"No  temporary  restraining  order  shall  be  granted  without 
notice  to  the  opposite  party  unless  it  shall  clearly  appear 
from  specific  facts  shown  by  affidavit  "or  by  verified  bill 


u8  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

that  immediate  and  irreparable  injury,  loss  or  damage  will 
result  to  the  applicant  before  notice  can  be  served  and  a 
hearing  had  thereon." 

Such  order  shall  be  indorsed  with  the  date  and  hour  of  issuance 
and  filed  forthwith  in  the  clerk's  office  and  entered  of  record.  It — 

"shall  define  the  injury  and  state  why  it  is  irreparable  and 
why  the  order  was  granted  without  notice,  and  shall  by  its 
terms  expire  within  such  time  after  entry,  not  to  exceed 
ten  days,  as  the  court  or  judge  may  fix,  unless  within  the 
time  so  fixed  the  order  is  extended  for  a  like  period  for 
good  cause  shown,  and  the  reasons  for  such  extension  shall 
be  entered  of  record." 

Practice  Upon  Hearing. — The  hearing  upon  the  application 
for  the  preliminary  injunction  shall  be  advanced  before  all  other 
matters  excepting  prior  applications  of  a  like  nature;  and  the 
temporary  restraining  order  shall  be  disssolved,  unless  the  appli- 
cant for  the  temporary  injunction  proceeds  with  the  hearing. 

The  opposite  party  upon  two  days'  notice  to  the  applicant  may 
appear  and  move  to  dissolve  or  modify  the  temporary  restrain- 
ing order,  and  "in  that  event  the  court  or  judge  shall  proceed 
to  hear  and  determine  the  motion  as  expeditiously  as  the  ends  of 
justice  may  require." 

Security  in  the  usual  terms  is  required  by  Section  18,  unless 
some  ground  of  exception  specified  in  Section  16  is  made  to  ap- 
pear. No  class  of  applications  for  injunctions  is  relieved  from 
the  necessity  of  a  bond  by  the  provisions  of  Section  16,  but  it  is 
there  set  forth  that  applications  are  governed  by  the  rules  of 
equity  courts  regulating  such  proceedings.  In  effect,  therefore, 
the  court  or  judge  may  exercise  discretion  regarding  security 
only  to  the  extent  that  the  practice  in  equity  permits. 

7.  ORDER  MUST  BE  SPECIFIC. 

Injunction  Order  Must  be  Specific  in  Terms. — In  another 
particular  also,  the  Clayton  Law  is  explicit  as  to  the  requirements 
of  the  reformed  practice  in  injunction  suits.  It  is  decreed  that 
henceforth  injunction  orders  shall  be  specific.  Section  19  enun- 
ciates the  rule  as  follows : 

"That  every  order  of  injunction  or  restraining  order 
shall  set  forth  the  reasons  for  the  issuance  of  the  same, 


INJUNCTIONS  AND  CONTEMPT  PROCEEDINGS.  119 

shall  be  specific  in  terms,  and  shall  describe  in  reasonable 
detail,  and  not  by  reference  to  the  bill  of  complaint  or 
other  document,  the  act  or  acts  sought  to  be  restrained,  and 
shall  be  binding  only  upon  the  parties  to  the  suit,  their  of- 
ficers, agents,  servants,  employees,  and  attorneys,  or  those 
in  active  concert  or  participating  with  them,  and  who  shall 
by  personal  service  or  otherwise,  have  received  actual  no- 
tice of  the  same." 

This  statutory  regulation  makes  specific  and  obligatory  a  re- 
quirement which  every  well-equipped  equity  practitioner  observes. 
Under  nebulous  rules  of  practice  inconceivably  lax  methods  have 
prevailed.  Injunctions  against  assemblages  of  strikers  have  con- 
tained restrictive  provisions  forbidding  them  to  congregate  at  a 
spot  named  in  the  order  "or  elsewhere";  indeed  under  orders 
thus  drawn,  assemblages  in  Europe,  Australia,  or  Japan,  or  in  any 
other  inhabited  or  uninhabited  portion  of  our  globe  would  fall 
equally  within  the  prohibited  zone. 

To  instance  every  type  of  looseness  or  deficiency  in  drafting 
would  require  thought  and  attention  to  a  prohibitory  extent ;  like 
proving  a  negative,  the  task  is  theoretically  possible  but  imprac- 
ticable in  application.  It  will  no  doubt  suffice  in  this  connection 
to  state  that  the  rule  enunciated  above  is  in  accordance  with  the 
procedure  in  force  in  those  courts  of  equity  which  stand  highest 
in  that  department  of  law. 

8.  SPECIAL  LIMITATIONS  IN  TRADE  DISPUTES. 

When  Injunction  Orders  in  Trade  Disputes  Allowed. — The 
leading  cases  were  studied  and  followed  by  the  Congressional 
committees  engaged  in  drafting  the  Clayton  Law,  with  the  result 
that  the  substance  of  those  decisions  is  incorporated  in  the  sec- 
tion relating  to  injunctions,  so  far  as  applicable.  The  authorities 
followed  are  valuable  and  form  a  useful  guide  to  the  legislative 
intent.10 

The  Clayton  Law  enters  fully  into  the  question  of  the  nature 
and  extent  of  injunctive  relief  permissible  in  cases  between  em- 
ployer and  employees.  When  disputes  arise  concerning  terms  or 
conditions  of  employment,  unless  such  relief  is  necessary  "to  pre- 

10  For  extracts  from  Report  of  Senate  Committee  on  the  Judiciary,  with 
authorities,  see  Appendix  N,  pages  335-344. 


I2O  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

vent  irreparable  injury  to  property,  or  to  a  property  right,  of  the 
party  making  the  application,  for  which  injury  there  is  no  ade- 
quate remedy  at  law" — the  application  will  be  denied. 

This  provision  is  contained  in  Section  20,  which  includes  within 
said  limitation  cases  of  persons  seeking  employment,  as  well  as 
employees. 

That  section  further  requires  that  when  an  injunctive  order  is 
issued  in  a  case  of  dispute  between  employer  and  employees,  there 
must  appear  in  the  moving  papers  a  statement  of  the  right  or 
property  jeopardized,  which  right  or  property  "must  be  described 
with  particularity";  and  it  is  also  provided  in  said  section  that 
the  application  "must  be  in  writing  and  sworn  to  by  the  applicant 
or  by  his  agent  or  attorney." 

The  second  paragraph  is  drawn  to  cover  a  variety  of  instances 
where  courts  have  seemed  to  over-extend  their  powers  in  the  pro- 
tection of  "property  or  property  rights,"  when  granting  injunc- 
tions against  acts  of  employees;  and  the  law  in  effect  now  re- 
quires that  employees  shall  not  be  enjoined  when  they  seek  to 
terminate  any  relation  or  employment,  singly  or  in  concert;  or 
when  they  seek  to  peacefully  persuade  others  to  join  them  in 
such  acts,  or  engage  in  kindred  lawful  conduct  connected  with 
labor  disputes. 

Peaceful  behavior  or  persuasion  under  such  circumstances  is 
expressly  permitted  and  removed  from  the  liability  to  restraining 
orders;  for  the  statute  goes  very  far  in  the  way  of  protecting 
labor  and  holding  above  it  the  aegis  of  the  law.11  The  section 
concludes  with  the  general  phrase — 

"nor  shall  any  of  the  acts  specified  in  this  paragraph  be 
considered  or  held  to  be  violations  of  any  law  of  the 
United  States." 

9.  CONTEMPT  PROCEEDINGS  WHERE  DISOBEDIENCE 
INVOLVES  CRIMINAL  ACT. 

Special  Contempt  Proceedings  Authorized  Where  Criminal 
Conduct  is  Shown. — Presumably  to  differentiate  between  liberty 
and  license,  and  to  repress  at  the  inception  the  use  of  violence, 

II  See  Senate  Report,  No.  698,  July  22,  1914,  for  a  full  statement  of  the 
reasons  leading  to  the  enactment  of  the  various  restrictions  upon  injunc- 
tions in  labor  disputes.  The  extracts  referred  to  in  note  10,  page  119, 
supra,  relate  solely  to  general  history  and  practice. 


INJUNCTIONS  AND  CONTEMPT  PROCEEDINGS.  121 

more  particularly  in  strikes  and  in  other  situations  where  force 
might  be  employed  to  resist  the  enforcement  of  the  orders  and 
decrees  of  the  court, — disobedience  of  court  writs,  process,  orders, 
etc.,  are  made  punishable  by  a  proceeding  for  contempt,  when 
such  disobedience  consists  in  doing  a  criminal  act.  Any  offence 
against  any  criminal  statute  of  the  United  States  or  against  the 
penal  laws  of  any  State  where  the  act  was  committed,  is  included 
in  the  general  inhibition;  and  the  provision  likewise  applies  to 
the  District  of  Columbia. 

This  enactment  and  the  procedure  pertaining  thereto  are  com- 
prised in  Sections  21  to  25,  inclusive,  of  the  Clayton  Law.  The 
proceeding  is  instituted  by  an  order  to  show  cause,  with  right  to 
attach  the  person,  if  the  defendant  is  an  individual,  or  to  se- 
questrate the  property  if  the  charge  is  made  against  a  corporation, 
and  the  defendant  neglects  or  refuses  to  appear. 

If  good  cause  is  shown,  however,  by  affidavit  or  proof  taken 
in  open  court  or  before  a  judge  and  filed  with  the  papers  in  the 
case,  the  court  or  judge  may  dispense  with  the  order  to  show 
cause,  and  issue  a  warrant  for  the  summary  arrest  of  defendant. 

The  person  so  charged  with  contempt  shall  be  brought  before 
the  court  without  unnecessary  delay  when  he  is  apprehended,  and 
shall  be  admitted  to  bail  in  a  reasonable  amount.  Thereafter  he 
shall  be  brought  to  trial  for  the  contempt,  and  the  subsequent  pro- 
ceedings shall  be  the  same  as  are  provided  in  cases  where  an 
order  to  show  cause  has  issued  in  the  first  instance. 

Defendant  May  Demand  Jury  Trial;  is  Entitled  to  Release 
upon  Reasonable  Bail. — The  defendant  under  the  practice  in  con- 
tempt proceedings  of  this  nature  is  entitled  of  right  to  a  jury  trial, 
if  demanded,  and  the  trial  shall  be  conducted  as  is  usual  in  crim- 
inal prosecutions. 

The  punishment  consists  of  imprisonment  for  a  term  not  to 
exceed  six  months,  and  a  fine.  The  amount  is  not  fixed,  ex- 
cept that  the  sum  paid  to  the  United  States  shall  not  exceed 
$1,000  where  the  defendant  is  a  natural  person.  The  fine  shall  be 
paid  to  the  government  or  to  defendant  or  defendants,  in  the  dis- 
cretion of  the  court;  and  the  court  has  a  like  discretion  to  dis- 
tribute the  fine,  where  one  or  more  of  the  complainants  or  other 
parties  to  the  proceeding  have  been  injured  by  the  act  constitu- 
ting the  contempt. 

Appeals  may  be  taken  as  provided  by  law  in  criminal  cases,  and 


122  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

the  judgment  may  be  affirmed,  reversed  or  modified  as  justice 
may  require. 

Reasonable  bail  may  be  fixed  and  the  defendant  admitted  to 
bail  after  the  appeal  has  been  consummated,  by  any  justice,  or 
any  judge  of  any  district  court  of  the  United  States,  or  any  court 
of  the  District  of  Columbia. 

Intent  and  Scope  of  Contempt  Proceedings  Considered. — 
The  existence  of  these  provisions  of  the  Clayton  Law  in  the  sec- 
tions immediately  following  those  which  regulate  the  practice 
upon  applications  for  injunctions  in  disputes  between  employer 
and  employees,  seems  to  indicate  that  the  purpose  of  Sections  21 
to  24,  inclusive,  is  to  provide  a  ready  means  of  meeting  and  over- 
coming violence  in  labor  troubles,  if  and  when  they  arise.  The 
words  of  the  statute  in  this  connection  are  not  special  but  general, 
and  in  terms  include  every  form  of  disobedience  to  the  writ,  proc- 
ess, order  or  other  command  of  a  United  States  court,  where  any 
infraction  of  a  Federal  or  State  statute  creating  a  crime,  is  in- 
volved. No  doubt  other  situations  will  occur  where  this  enact- 
ment will  be  operative  and  its  powers  invoked,  in  cases  outside  of 
labor  disputes;  but  while  these  cases  are  possible,  the  vast  major- 
ity of  proceedings  of  this  description  will,  it  is  believed,  be  of  the 
class  mentioned  above.  If  this  view  is  correct,  the  general  pur- 
port of  those  provisions  is  to  remove  from  labor  the  fear  of  inter- 
ference with  their  peaceful  efforts  to  adjust  questions  or  dis- 
putes connected  with  their  divers  callings;  but  if  they  overstep 
the  boundaries  which  the  law  circumscribes  and  seek  to  promote 
their  interests  or  to  propagate  their  ideas  by  illicit  means  or  meas- 
ures, then  these  proceedings  provide  a  ready  and  powerful  method 
for  the  judicial  control  and  correction  of  the  situation. 

10.  OLD  FORMS  OF  CONTEMPT  RETAINED. 

Familiar  Forms  of  Contempt  Proceedings  Retained. — Fur- 
ther corroboration  of  these  views  is  contained  in  the  provisions 
of  Section  24.  It  is  therein  set  forth  that  the  contempt  proceed- 
ings provided  for  in  the  prior  sections  of  the  Clayton  Law  shall  not 
be  construed  to  relate  to  "contempts  committed  in  the  presence 
of  the  court,  or  so  near  thereto  as  to  obstruct  the  administration 
of  justice" ;  nor  shall  the  existing  practice  or  usages  at  law  or  in 
equity  be  superseded  in  connection  with  contempt  proceedings 
instituted  to  punish  disobedience  of  any  lawful  writ,  process,  rule, 


INJUNCTIONS  AND  CONTEMPT  PROCEEDINGS.  123 

decree  or  command  entered  in  any  suit  or  action  brought  or  prose- 
cuted in  the  name  of,  or  on  behalf  of,  the  United  States.  In  short, 
the  old  practice  for  the  punishment  of  contempts  is  left  intact, 
excepting  that  special  provision  is  made  for  the  prosecution  of 
resistence  accompanied  by  violence,  with  indications  that  this 
proceeding  is  intended  as  a  precautionary  measure  directed  espe- 
cially at  labor  disputes  and  other  situations  where  the  interests  of 
numerous  persons  are  involved. 

The  final  regulation  of  the  practice  in  contempt  actions  appears 
in  Section  25,  where  the  limitation  for  prosecution  is  fixed  at  one 
year  from  the  date  of  the  act  complained  of.  The  provision  is 
unqualified,  and  includes  all  contempt  of  every  name  and  nature. 

xi.  STATUTORY  LIMITATION  ONE  YEAR;  CRIMINAL 
PROCEEDINGS  NOT  BARRED. 

Contempt  Proceedings  do  not  Bar  Criminal  Prosecution. — 

In  addition  to  limiting  the  period  of  prosecution,  Section  25  fur- 
ther enacts  that  the  proceeding  to  punish  a  contempt  shall  not 
be  a  bar  to  any  criminal  prosecution  for  the  same  act  or  acts, 
and  that  nothing  therein  contained  shall  affect  any  proceedings 
in  contempt  pending  at  the  time  of  the  passage  of  this  act. 

The  relationship  between  the  right  to  injunctive  relief  and  the 
right  to  enforce  it  through  proceedings  in  contempt  for  infrac- 
tions thereof,  is  so  intimate  and  natural  that  we  have  not  sought 
to  introduce  them  in  separate  chapters.  Their  juxtaposition  in 
the  statute  is  some  indication  that  they  should  not  be  separated 
here. 


CHAPTER  XL 

ACTIONS  FOR  DAMAGES  UNDER  THE  PROVISIONS 
OF  THE  FEDERAL  TRADE  COMMISSION  ACT 
AND  ANTI-TRUST  LAWS. 

1.  Generally  as  to  Right  to  Bring  Actions, 

2.  Right  Covers  All  Violations  of  Anti-trust  Laws. 

3.  Sherman  Law  Provision  for  Triple  Damages  Re-enacted. 

4.  Certain  Judgments  Prima  Facie  Evidence. 

5.  Government  Suit  Extends  Statute  of  Limitations. 

6.  Locus  of  Suit. 

7.  Procedure  of  Service  Discussed. 

8.  Attendance  of  Witnesses  Considered. 

i.  GENERALLY  AS  TO  RIGHT  TO  BRING  ACTIONS. 

General  Remarks. — Among  the  anomalous  features  of  the  new 
legislation  comprised  in  the  Federal  Trade  Commission  Act  and 
the  Clayton  Law  must  be  included  the  absence  of  provision  for 
any  description  of  individual  initiative  under  the  first-named 
statute.  Even  the  means  to  be  availed  of  by  the  Commission  in 
instituting  proceedings  and  setting  in  motion  its  machinery  is  left 
in  uncertainty  by  the  law-makers. 

Whether  the  Commission  is  authorized  to  exercise  the  powers 
granted  by  Section  5  of  the  creating  act  upon  the  basis  of  a 
sworn  affidavit  or  verified  complaint,  or  by  testimony  secured  at 
a  preliminary  hearing  or  investigation,  or  whether  it  was  intended 
that  that  body  shall  take  judicial  notice  of  facts  within  its  official 
knowledge  and  proceed  accordingly  to  hear  and  determine,  are 
elements  of  the  actual  procedure  we  can  only  surmise,  until  this 
and  similar  questions  have  been  made  the  object  of  decisions  by 
the  Commission,  and  have  been  reviewed  by  the  courts. 

It  seems  so  probable,  however,  that  the  Commission  will  con- 
tinue to  accept  and  act  upon  verified  charges  in  affidavits  or  in  a 
formal  complaint,  that  such  procedure  may  be  assumed  for  the 
present,  and  until  the  problem  is  settled  in  due  course.1 

I  On  this  point,  Rule  II  prescribes  that  "the  application  shall  be  in  writ- 
ing, signed  by  or  in  behalf  of  the  applicant."  Some  phases  of  the  jurisdic- 
tional  question  involved  will  no  doubt  be  the  subject  of  adjudications,  when 
they  come  up  in  due  course.  For  provisions  of  Rules  generally, — see  pages 
231-235,  Post. 

124 


ACTIONS  FOR  DAMAGES.  125 

The  question  of  the  right  of  an  individual  to  sue  for  damages 
for  infractions  is  in  a  similarly  uncertain  state.  Indeed,  this  con- 
dition of  doubt  takes  on  a  twofold  aspect :  (a)  has  he  a  right  to 
sue  at  all ;  (b)  does  such  right  as  exists  arise  prior  to  an  actual 
adjudication  by  the  Commission  upon  the  legality  of  the  alleged 
wrongful  act. 

Upon  the  ancient  pronouncement  by  Lord  Hardwicke :  "There 
can  be  no  injury  but  there  must  be  a  remedy,"2  it  is  obvious  that 
redress  must  somewhere  and  by  some  means  be  found  for  the 
private  injury  involved  in  the  "unfair  methods  of  competition  in 
commerce,"  the  punishment  and  prevention  of  which  was  the  very 
essence  of  the  legislative  idea  in  creating  the  Federal  Trade  Com- 
mission and  endowing  it  with  wide  and  compelling  powers. 

Of  course,  the  general  purpose  of  the  creating  act  is  to  pro- 
vide a  continuing  body  with  administrative  and  judicial  powers, 
which  shall  oversee  the  business  situation  of  the  country  at  large, 
and  will  as  if  from  a  watchtower,  behold  the  conflagration  at  its 
start,  and  overcome  it  before  the  difficulty  has  passed  beyond  con- 
trol. To  observe,  control  and  correct, — these  are  the  three  main 
factors  in  the  official  life  and  duties  of  the  Federal  Trade  Com- 
mission. But  while  it  is  fully — even  exclusively — empowered  to 
act,  it  does  not  follow  that  a  private  person  does  not  obtain  deriva- 
tive rights. 

2.  RIGHT  COVERS  ALL  VIOLATIONS  OF  ANTI-TRUST 
LAWS. 

Laws  Imply  Rights  and  Liabilities  Through  Actions. — The 

power  to  sue  for  injuries  to  business  or  property  "by  reason  of 
anything  forbidden  in  the  Anti-trust  laws,"  and  to  recover  three- 
fold damages,  conferred  by  Section  4  of  the  Clayton  Law,  the 
privilege  to  depend  upon  the  final  decree  in  a  government  suit  or 
action  as  prima  facie  evidence  in  a  similar  proceeding  brought 
against  the  same  defendant  by  a  private  party  granted  by  Section 
5  of  said  law ;  and  the  important  provision  in  paragraph  2  there- 
of, wherein  and  whereby  the  three  year  statute  of  limitation  is 
suspended  for  private  parties  during  the  pendency  of  such  gov- 
ernment suit  or  action,  or  criminal  proceeding, — are  all  features 
which,  taken  together,  seem  pro  tanto  to  indicate  and  recognize  a 

2  Charitable  Corporations  v.  Sir  Robert  Sutton,  2d  Atkins  400,  decided 
in  1742. 


126  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

right  that  must  extend  into  the  provisions  of  the  Federal  Trade 
Commission  Act  although  the  statute  itself  is  not  enumerated 
among  and  technically  is  outside  of  the  Anti-trust  laws. 

At  the  very  least,  these  elements  in  an  associated  statute  en- 
acted almost  simultaneously  with  that  law,  encourage  the  injured 
party  in  the  belief  that  "unfair  methods  of  competition  in  com- 
merce" assure  and  carry  with  them  the  right  to  sue  for  the  dam- 
age that  the  person  has  sustained  in  his  business  or  property. 

These  Implied  Rights  Present  Question  for  Supreme  Court. 
— The  question  is  one  which  must  be  passed  upon  by  the  Supreme 
Court,  unless  Congress,  acting  upon  the  "recommendations  for 
additional  legislation"  permitted  by  paragraph  (f),  Section  6  of 
the  creating  act,  or  legislating  upon  its  own  initiative, — shall  in 
the  meantime  enlarge  the  right  to  sue  under  authority  of  Section 
4  of  the  Clayton  Law,  and  shall  in  specific  terms  authorize  recov- 
eries for  injuries  inflicted  by  "unfair  methods  of  competition  in 
commerce."3 

3.  SHERMAN  LAW  PROVISION  FOR  TRIPLE  DAMAGES 
RE-ENACTED. 

Right  to  Recover  Threefold  Damages. — As  has  already  been 
mentioned  in  the  foregoing  discussion  of  particular  phases  of  the 
Federal  Trade  Commission  Act,  there  is  no  uncertain  sound  to 
the  phraseology  employed  in  the  Clayton  Law  in  connection  with 
the  right  of  an  individual  to  sue  for  and  recover  damages  sus- 
tained under  any  infraction  of  the  Anti-trust  laws.  In  fact,  the 
threefold  damage  clause  of  the  Sherman  Law  and  the  Wilson 
Tariff  Act,  is  repeated  and  embodied  in  Section  4  of  the  Clay- 
ton Law.4 

Probably  all  actions  of  that  nature  in  future  will  be  brought 
under  the  authority  of  the  later  statute,  though  in  its  terms  it  is 

3  As  the  matter  stands,  such  a  right  must  be  deduced  from  the  legis- 
lative acts;   and  leading  cases  under  the  Interstate  Commerce  Act, — "Act 
to  Regulate  Commerce"  (24  Stat.  382),  as  amended,— have  held  that  in  a 
similar  situation  the  Commerce  Commission  must  take  the  primary  step, 
in  order  that  private  rights  may  accrue.     Texas  and  Pacific  Ry.  Co.  v. 
Abilene  Cotton  Oil  Co.,  204  U.  S.  426;   Interstate  Commerce  Commission 
v.  Illinois  Central  R.  R.  Co.,  215  U.  S.  452. 

4  For  text  of  Sherman  Law,  see  Appendix  C,  pages  279-281 ;  for  Wilson 
Tariff  Act,  Sections  73  to  77,  inclusive,  see  Appendix  D,  pages  282-3. 


ACTIONS  FOR  DAMAGES.  127 

not  exclusive,  and  the  right  to  sue  thereunder  is  cumulative  and 
not  due  to  any  repealing  of  the  prior  laws,  in  that  particular. 
Section  4  is  as  follows : 

"That  any  person  who  shall  be  injured  in  his  business  or 
property  by  reason  of  anything  forbidden  in  the  Anti-trust 
laws  may  sue  therefor  in  any  district  court  of  the  United 
States  in  which  the  defendant  resides  or  is  found  or  has 
an  agent,  without  respect  to  the  amount  in  controversy, 
and  shall  recover  threefold  the  damages  by  him  sustained, 
and  the  cost  of  suit,  including  a  reasonable  attorney's  fee." 

As  stated  above,  this  language  is  identical  with  Section  7  of 
the  Sherman  Law,  and  Section  77  of  the  Wilson  Tariff  Law,  ex- 
cept that  the  scope  is  here  broadened  to  include  the  whole  range 
of  the  Anti-trust  laws. 

The  Definition  of  "Person"  in  Clayton  Law. — In  view  of  the 
importance  of  the  rights  conferred  by  Section  4  of  the  Clayton 
Law,  it  is  necessary  as  well  as  useful  to  note  that  the  "person," 
to  whom  that  right  pertains,  includes  corporations  and  associa- 
tions anywhere  authorized  or  existing;  also  that  this  definition, 
contained  in  paragraph  3,  Section  I  of  the  Clayton  Law,  is  copied 
from  Section  8  of  the  Sherman  Law ;  consequently,  not  only  pri- 
vate individuals  but  associations  of  every  form,  whether  char- 
tered or  unincorporated,  provided  only  they  "exist"  anywhere, 
may  avail  themselves  of  this  right  to  bring  suit. 

Additions  to  Injuries  that  Will  Sustain  Action. — Persons  in- 
jured by  price  discrimination,  conditional  or  "tying"  contracts, 
stock  ownership  or  interlocking  directorates,  henceforth  may  sue 
for  and  recover  threefold  the  damages  they  have  suffered  there- 
from. 

Since  the  Sherman  Law  and  the  Wilson  Tariff  Law  also  fall 
within  the  list  of  Anti-trust  legislation,  enumerated  in  paragraph 
i,  Section  I  of  the  Clayton  Law, — injuries  to  business  or  property 
sustained  by  reason  of  contracts  in  restraint  of  trade,  monopolies 
or  attempts  to  monopolize,  or  conspiracies,  as  well  as  contracts  in 
restraint  of  import  trade,  carry  with  them  a  like  privilege. 

Whether  actions  under  the  provisions  of  the  Clayton  Law  will 
lie,  before  the  Federal  Trade  Commission  has  passed  upon  the  al- 
leged violation,  is  a  question  for  the  courts  to  determine.  In  this 
respect,  the  situation  somewhat  resembles  the  problem  presented 
by  the  want  of  completeness  in  the  wording  of  the  Federal  Trade 


128  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

Commission  Act  in  marking  out  the  extent  of  the  right  to  litigate, 
(see  pages  125,  126,  supra).  Perhaps  amendments  will  be  made 
which  will  clear  up  both  of  these  questions. 

4.  CERTAIN  JUDGMENTS  PRIM  A  FACIE  EVIDENCE. 

Former  Judgment  or  Decree  Prima  Facie  Evidence. — Sec- 
tion 5  of  the  Clayton  Law  affords  the  person  bringing  an  action 
under  the  Anti-trust  laws  the  advantage  of  introducing  as  prima 
facie  evidence  the  final  decree  in  any  civil  or  criminal  proceeding 
which  the  government  has  instituted  against  the  same  defendant 
under  said  laws.  Notwithstanding  this  privilege,  the  plaintiff,  in 
order  to  recover  damages,  would  still  have  to  show  that  he  had 
suffered  injury  from  the  wrongful  act. 

5.  GOVERNMENT  SUIT  EXTENDS  STATUTE  OF  LIMIT  A- 
TIONS. 

Extension  of  Time  in  Which  to  Sue. — By  paragraph  2  of 
Section  5,  the  statute  of  limitations  is  made  inoperative  against  pri- 
vate claims  during  the  pendency  of  a  government  suit,  either  civil 
or  criminal ;  and  in  many  cases  the  three  year  limit  will  thereby 
be  materially  extended.  In  brief,  since  the  extension  springs 
from  any  inclusion  whatever  and  is  "in  respect  of  each  and  every 
private  right  of  action  arising  under  said  [Anti-trust]  laws  and 
based  in  whole  or  in  part  on  any  matter  complained  of  in  said 
suit  or  proceedings,"  it  is  difficult  to  conceive  how  language  of 
broader  import  could  have  been  employed. 

6.  LOCUS  OF  SUIT. 

Corporate  Defendant  May  be  Sued  Wherever  Found. — The 
remaining  provision  of  the  Anti-trust  laws  which  interests  and 
concerns  us  at  this  time  and  in  this  connection,  is  contained  in 
Section  12  of  the  Clayton  Law.  Owing  to  its  brevity  we  present 
it  in  its  entirety : 

"That  any  suit,  action,  or  proceeding  under  the  Anti- 
trust laws  against  a  corporation  may  be  brought  not  only 
in  the  judicial  district  whereof  it  is  an  inhabitant,  but  also 
in  any  district  wherein  it  may  be  found  or  transacts  busi- 
ness; and  all  process  in  such  cases  may  be  served  in  the 
district  of  which  it  is  an  inhabitant,  or  wherever  it  may  be 
found." 


ACTIONS  FOR  DAMAGES. 


129 


No  definition  of  the  word  "process"  appears  in  any  place  in  the 
Anti-trust  laws. 

7.  PROCEDURE  OF  SERVICE  OF  PROCESS  DISCUSSED. 

Service  of  Process. — From  the  context  in  paragraph  8  of  the 
Federal  Trade  Commission  Act,  and  the  corresponding  provision 
(paragraph  7,  Section  n)  of  the  Clayton  Law,  it  appears  that 
other  legal  papers  beside  complaints  and  orders  are  included. 
Probably  the  term  covers  writs,  warrants  of  arrest  and  every 
species  of  mandate  requiring  the  authority  and  signature  of  the 
court,  excepting  subpoenas.  This  species  of  mandatory  direction 
to  appear  is  issued  in  many  State  courts  by  the  attorney,  although 
such  is  not  the  practice  in  the  Federal  courts.  Separate  provisions 
governing  the  service,  etc.,  of  subpoenas  are  found  in  Section  12 
of  the  Clayton  Law,  but  it  applies  only  to  actions  brought  by  or  on 
behalf  of  the  government. 

But  outside  of  and  beyond  the  matter  of  inference  that  may  be 
drawn  from  the  separate  mention  of  subpoenas  in  that  section,  it 
presents  a  matter  of  interest  here.  Subpoenas  in  any  action 
brought  by  or  on  behalf  of  the  United  States  under  the  Anti- 
trust Laws — whether  such  matter  is  civil  or  criminal — may  run 
into  another  judicial  district  than  that  in  which  the  trial  is  held ; 
but  witnesses  shall  not  be  summoned  from  a  place  more  distant 
than  one  hundred  miles  from  the  point  of  trial  without  the  per- 
mission of  the  trial  court  upon  proper  application  and  cause 
shown. 

It  is  believed  that  the  statute  might  well  extend  this  rule  to 
every  litigant  under  the  Anti-trust  laws.  The  method  of  taking 
testimony  by  Commission  de  bene  esse,  i.  e.,  subject  to  exception 
upon  the  trial, — is  both  expensive  and  unsatisfactory.  No  good 
reason  is  apparent  why  the  government  with  its  vast  machinery  of 
salaried  officials  should  be  exempt  from  the  hardships  and  in- 
conveniences of  this  rule,  while  it  is  continued  in  full  operation 
to  vex  and  discourage  private  parties  in  point  of  both  time  and 
expense. 

Anti-trust  Actions  Semi-public  Matters. — All  Anti-trust  ac- 
tions are  in  their  nature  semi-public,  since  they  serve  to  deter  as 
well  as  to  punish  wrong-doing  in  quarters  where  trusts  and 
monopolies  were  the  controlling  factors  in  business,  up  to  a  com- 
paratively recent  time.  To  bring  about  a  reform  and  to  inculcate 
9 


130  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

new  ideals  in  business  is  the  evident  purpose  of  Anti-trust  leg- 
islation. 

8.  ATTENDANCE  OF  WITNESSES  CONSIDERED. 

Witnesses. — The  danger  of  calling  the  witness  a  great  distance 
from  home  to  harass  him  is  prevented  by  the  necessity  of  obtain- 
ing leave  of  the  court,  when  the  resulting  journey  would  exceed 
one  hundred  miles. 

Arguments  of  weight  may  no  doubt  be  advanced  against  the  ex- 
tension of  the  right  to  compel  witnesses  in  ordinary  actions  to  at- 
tend before  the  Federal  courts ;  but  in  Anti-trust  cases,  we  repeat, 
latitude  might  well  be  afforded  to  treat  the  States  as  counties  are 
regarded  in  State  courts,  and  to  compel  attendance  within  a  radius 
of  five  hundred  miles,  or  such  maximum  distance  as  Congress 
shall  see  fit  to  fix ;  reserving  each  particular  exceptional  instance 
to  be  passed  upon  by  the  trial  court, — the  subpoena  to  be  effectual 
therein  only  when  officially  indorsed. 

The  actions  for  damages  brought  by  "persons"  under  the  Anti- 
trust laws,  except  as  above  specified,  are  subject  to  the  usual  rules 
and  regulations  applicable  to  other  litigations  of  that  nature. 


CHAPTER  XII. 

CRIMINAL  PROVISIONS  OF  THE  ANTI-TRUST 

LAWS. 

1.  Federal  Trade  Commission  Act. 

2.  Clayton  Law. 

3.  Sherman  Law. 

4.  Wilson  Tariff  Law. 

General  Consideration  of  Subject  Essential. — In  treating  of 
the  criminal  features  of  the  Anti-trust  laws,  and  more  particu- 
larly of  those  contained  in  the  latest  enactments,  viz.,  the  Federal 
Trade  Commission  Act,  and  the  Clayton  Law,  it  is  essential  that 
certain  facts  and  circumstances  shall  be  clearly  understood  and 
constantly  borne  in  mind ;  otherwise  the  true  basis  for  constru- 
ing these  legislative  provisions  will  be  lost  sight  of  and  perhaps 
entirely  passed  by. 

Nature  of  First  Named  Two  Statutes  Civil  rather  than  Crim- 
inal.— In  the  first  place,  the  first  named  two  statutes  are  curative 
and  administrative  rather  than  penal  in  their  inception.  The 
Sherman  Law1  is  drastic,  and  the  penalties  vary  from  restraint 
by  injunction,  and  sequestration  and  condemnation  of  property, 
to  fines  and  imprisonment, — all  comprised  within  the  space  of 
eight  brief  sections. 

The  Wilson  Law2  applies  the  same  rules  and  penalties  to  the 
prohibited  acts  when  committed  in  connection  with  import  trade. 

It  remained  for  the  Federal  Trade  Commission  Act  and  the 
Clayton  Law  to  propose  some  scheme  of  conduct  which  would 
amplify  the  legislative  plan  and  present  it  as  a  rounded  and  com- 
pleted whole. 

Operation  Postponed  in  Some  Instances. — Realizing  that  the 
business  interests  of  the  country  at  large  must  adjust  themselves 
to  the  situation  which  these  new  regulations  created,  Congress  de- 
ferred the  actual  operation  of  certain  provisions  for  the  space  of 
two  years ;  and  has  confined  the  punitive  features  to  restraining 
orders  and  threefold  damages  in  numerous  instances  where  the 

1  For  text,  see  Appendix  C,  pages  279-281. 

2  For  text  of  Sections  73-77,  inclusive,  see  Appendix  D,  pages  282,  283, 


132  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

original  drafts  of  the  laws  show  beyond  discussion  that  the  pro- 
posers of  this  legislation  had  in  mind  measures  which  would  mete 
out  retributive  justice  to  an  extent  elsewhere  imposed  only  upon 
high  crimes  and  misdemeanors.  Even  the  milder  type  of  proce- 
dure implied  in  the  arbitrary  power  to  fix  prices  or  to  appoint 
supervisors  has  been  eliminated  in  the  laws  as  actually  passed, 
and  the  harshness  approaching  a  state  of  vindictiveness  so  ap- 
parent in  the  Sherman  Law,  is  altogether  wanting  here.  In  a  re- 
port by  a  Committee  of  Congress,  the  language  employed  is : 

"*  *  *  it  was  thought  best,  especially  in  view  of  the 
experimental  state  of  this  legislation,  that  the  harshness  of 
the  criminal  law  should  not  be  applied,  but  the  enforce- 
ment *  *  *  should  be  given  to  the  Federal  Trade 
Commission."3 

While  the  passage  quoted  is  specially  directed  to  one  class  of 
provisions  of  the  Clayton  Law,  the  attitude  is  that  adopted  by 
Congress  when  approaching  the  subject  as  a  whole. 

It  must  be  understood,  however,  that  this  attitude  was  not  in- 
tended to  produce  a  body  which  would  be  incapable  of  enforcing 
as  well  as  promulgating  its  decrees.  At  another  place  in  the  rec- 
ord of  the  conferences  and  discussions  leading  up  to  this  legisla- 
tion, its  purpose  and  purport  are  shown  to  be  by  no  means  of  a 
passive  or  nugatory  character : 

"The  trade  commission  would  constitute  what  might  be 
termed  a  'commercial  police/  to  maintain  a  constant  guard 
over  our  vast  and  complex  interstate  commerce.  It  would 
be  a  strong  arm  to  aid  the  courts  in  the  enforcement  of  the 
laws  passed  by  Congress.  The  trade  commission  *  *  *  is 
just  as  much  needed,  as  an  aid  to  our  national  commerce,  as 
policemen  are  needed  in  the  enforcement  of  traffic  regula- 
tions in  a  great  city.  It  would  be  just  as  absurd  to  expect 
the  courts  to  enforce  adequate  laws  for  the  protection  of 
interstate  commerce  against  unfair  competition  and  mo- 
nopoly, without  the  aid  of  such  a  trade  commission,  as  it 
would  be  to  expect  a  police  court  to  enforce  traffic  laws 
without  the  aid  of  policemen — policemen,  too,  with  power 

3  Report  No.  698,  63d  Congress,  2d  Session, — Senate  Committee  on  Ju- 
diciary, July  22,  1914. 


CRIMINAL  PROVISIONS  OF  ANTI-TRUST  LAWS.          133 

to  make  and  enforce  traffic  rules,  and  not  merely  power 
to  'investigate  and  report.'  "4 

Merger  of  Bureau  of  Corporations  Considered. — Perhaps 
some  color  might  be  lent  to  the  suggestion  that  the  power  of  the 
Commission  is  mainly  ministerial  by  the  fact  of  the  merging 
therewith  of  the  Bureau  of  Corporations.  The  latter  body  was 
created  under  Act  of  February  14,  1903.  Its  powers  were  rather 
extensive  within  its  own  sphere,  i.  e.,  the  investigations  of  the  or- 
ganization and  management  of  corporations,  to  the  end  that  the 
President  might  make  recommendations  to  Congress  for  new 
legislation.  The  great  defect  was  in  the  failure  specifically  to  con- 
fer upon  it  power  to  compel  annual  reports  from  industrial  cor- 
porations engaged  in  interstate  commerce.5 

In  1913,  the  Bureau  was  placed  under  the  jurisdiction  of  the 
Department  of  Commerce,  and  by  Section  3  of  the  Federal  Trade 
Commission  Act  its  powers  are  transferred  to  and  merged  in  the 
jurisdiction  conferred  upon  the  Federal  Trade  Commission. 

System  of  Interstate  Commerce  Commission  Followed. — 
In  the  details  of  organization  of  the  Trade  Commission,  the  provi- 
sions of  the  act  (with  its  amendments)  creating  the  Interstate 
Commerce  Commission6  are  followed  wherever  practicable ;  and 
the  innocuousness  of  the  limited  scope  of  power  which  character- 
ized the  Bureau  has  ceased  to  pervade  the  legislation  whereby 
the  Anti-trust  laws  are  now  sought  to  be  enforced. 

Supplementary  Legislations  Suggested  by  Statute. — While 
the  infliction  of  the  usual  penalties  incident  to  criminal  statutes  is 
in  general  avoided,  there  are  frequent  intimations  that  severer 
measures  will  be  resorted  to,  if  experience  proves  they  are  re- 
quired to  accomplish  results.  In  fact,  the  Federal  Trade  Com- 
mission Act,  Section  6,  paragraph  (f),  makes  it  obligatory  upon 
that  body  when  reporting  to  Congress,  "to  submit  therewith 
recommendations  for  additional  legislation." 

With  these  introductory  comments  upon  the  comparative  pre- 
dominance of  civil  over  criminal  features  in  the  law  supple- 

4  Report  No.  533,  63d  Congress,  2d  Session,-— House  Committee  on  In- 
terstate and  Foreign  Commerce,  April  14,  1914. 

5  See  Act  creating  the  Bureau  of  Corporations,  Appendix  E,  pages  284-5. 

6  Interstate  Commerce  Act,  entitled  "An  Act  to  Regulate  Commerce," 
approved  April  4,  1887,— 24  U.  S.  Statutes  at  Large  379-    For  text  of 
original  act,  see  Appendix  O,  pages  345-361. 


134  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

mentary  to  the  Anti-trust  laws,  and  the  accompanying  Act  which 
formulates  the  machinery  for  the  enforcement  thereof, — we  now 
proceed  with  the  specific  consideration  of  the  subject-matter  of 
this  chapter. 

x.  FEDERAL  TRADE  COMMISSION  ACT. 

Essential  Element  in  Statute. — The  law  itself  is  mainly  de- 
claratory of  a  new  ethical  code  in  business  dealings.  The  essen- 
tial feature  is  contained  in  Section  5,  paragraph  I : 

"That  unfair  methods  of  competition  in  commerce  are 
hereby  declared  unlawful." 

Method  of  Procedure. — Various  steps  are  required,  as  therein 
provided,  to  bring  the  defendant  before  the  Commission  and  after 
a  trial,  to  authorize  the  issuance  of  a  restraining  or  mandatory 
order,  where  the  charge  is  proven  to  the  satisfaction-  of  the  Com- 
mission by  competent  evidence.  Until  reversed  or  modified  these 
orders  have  all  the  force  and  effect  of  judgments  by  a  duly  con- 
stituted court,  with  the  exception  that  infractions  thereof  are 
dealt  with  by  the  Federal  courts,  and  not  by  the  Commission  it- 
self. So  far  the  administration  of  justice  is  confined  to  the  civil 
side  of  the  tribunals,  and  the  enforcement  is  accomplished  entirely 
by  restraining  orders  of  the  Commission  or  courts,  with  the  right 
upon  the  application  of  the  Attorney-General,  at  the  request  of 
the  Commission,  to  add  the  compelling  force  of  writs  of  man- 
damus, as  well.7  Willful  failure  of  witnesses  to  attend  before  the 
Commission  and  produce  documents  and  papers,  is  also  punish- 
able by  proceedings  for  civil  contempt,  Section  9,  paragraph  2. 

Right  of  Enquiry  into  Corporation's  Affairs. — The  right  to 
enquire  and  conduct  searching  examinations  is  an  essential  pre- 
rogative and  characterizing  feature  of  the  Commission;  without 
it  important  provisions  of  the  extensive  jurisdiction  conferred 
by  Congress  would  accomplish  no  definite  end.  Consequently,  the 
power  to  require  the  attendance  of  persons  and  the  production  of 
documentary  evidence  is  not  left  to  civil  means  of  enforcement, — 
willful  failure  to  testify  is  by  Section  10,  made  a  criminal  act, 
punishable  as  a  penal  offence ;  in  this  instance  the  maximum  fine 
is  $5,000,  while  the  prison  term  that  may  be  imposed  is  one  year. 

7  Federal  Trade  Commission  Act,  Section  9,  paragraph  4,  page  256,  post. 


CRIMINAL  PROVISIONS  OF  ANTI-TRUST  LAWS.  135 

Correctness  in  Corporate  Records  Required.— In  and  by  the 
terms  of  paragraph  2  of  Section  10,  practices  not  altogether  un- 
known in  corporate  management  or  preparation  of  documents 
and  records  for  an  impending  investigation  or  suit,  will  in  future 
be  rendered  more  dangerous  even  if  they  do  not  become  less  fre- 
quent. 

Presumably  beneficial  results  will  ensue.  In  brief,  "doctoring" 
records,  concealing  or  mutilating  them  or  removing  them  out- 
side of  the  jurisdiction,  will  in  future  be  subject  to  a  penalty  more 
severe  than  in  the  event  of  mere  refusal  to  testify  or  to  produce 
documentary  evidence  at  the  Commission's  command. 

The  essential  points  in  this  important  provision  are  that  any 
person  who  shall — 

"willfully  make  or  cause  to  be  made,  any  false  entry  or 
statement  of  fact  in  any  report  required  to  be  made  by 
this  Act,  or  who  shall  willfully  make,  or  cause  to  be  made 
any  false  entry  in  any  account,  record  or  memorandum 
kept  by  any  corporation  subject  to  this  act,  or  who  shall 
willfully  neglect  or  fail  to  make,  or  to  cause  to  be  made, 
full,  true  and  correct  entries  in  such  accounts,  records,  or 
memoranda  of  all  facts,  and  transactions  appertaining  to 
the  business  of  such  corporation,  or  who  shall  willfully 
remove  out  of  the  jurisdiction  of  the  United  States,  or 
willfully  mutilate,  alter  or  by  any  other  means  falsify  any 
documentary  evidence  of  such  corporation,  or  who  shall 
willfully  refuse  to  submit  to  the  Commission  or  to  any  of 
its  authorized  agents,  for  the  purpose  of  inspection  and 
taking  copies,  any  documentary  evidence  of  such  corpora- 
tion in  his  possession  or  within  his  control,  shall  be  deemed 
guilty  of  an  offence  against  the  United  States," 

is  punishable  by  a  fine  of  not  less  than  $1,000,  nor  more  than 
$5,000,  and  is  liable  to  a  period  of  imprisonment  that  may  extend 
to  three  years.  The  enforcement  is  by  criminal  prosecution  in  any 
Federal  court  of  competent  jurisdiction. 

This  enactment  creates  a  situation  which  cannot  fail  to  result 
in  a  new  era  in  respect  to  gaining  public  confidence  for  corporate 
records  and  accounts.  Honest  book-keeping  and  maintenance  of 
records  at  once  accurate  and  complete  are  the  badges  of  perma- 
nent success  in  business.  While  it  is  true  that  maintenance  of 
accurate  records  and  accounts  may  not  of  itself  imply  a  high 


136  MANUAL  OF  FEDERAL  TRADE;  COMMISSION. 

standard  in  the  transaction  of  business  affairs,  such  a  means  of 
procedure  will  tend  to  create  an  atmosphere  that  is  opposed  to 
"unfair  methods  of  competition  in  commerce."  Plain  dealing  will 
be  more  congenial  to  such  control  and  flourish  far  more  naturally 
than  amid  an  atmosphere  where  falsification,  mutilation  or  re- 
moval of  records  and  books  of  accounts  is  permitted  or  desired. 

If  Demanded,  Reports  by  Corporations  Required. — As  we 
have  seen,  the  right  to  demand  the  preparation  of  reports  by 
corporations  and  the  filing  thereof  with  the  Commission  was 
specifically  included  within  the  statutory  enlargement  of  the 
system  of  corporate  control  it  acquired  when  the  right  to  in- 
vestigate corporate  affairs  was  transferred  by  amalgamating  the 
Bureau  of  Corporations8  with  the  Federal  Trade  Commission. 
This  right  to  demand  reports  by  corporations  is  not,  however, 
enforceable  by  criminal  proceedings.  Disobedience,  if  continued 
for  a  period  of  thirty  days  after  the  date  fixed  for  such  filing,  is 
made  the  basis  of  a  civil  action  to  recover  $100  for  each  day  of 
the  continuance  of  such  failure,  see  Section  10,  paragraph  3.  In 
large  corporations,  however,  this  item  of  expense  would  not  be 
very  burdensome,  and  probably  it  will  later  be  made  a  criminal 
offence. 

Unauthorized  Publicity  Penalized. — Since  the  publication  of 
the  reports  or  other  informations  is  made  discretionary  with  the 
Commission,  excepting  that  it  is  positively  prohibited  from  dis- 
closing trade  secrets  and  names  of  customers  (paragraph  b,  of 
Section  6),  the  ability  to  keep  private  its  counsels,  proceedings 
and  records,  is  an  important  factor  in  the  successful  carrying  out 
of  the  legislative  scheme.  Accordingly,  a  criminal  penalty  con- 
sisting of  a  fine  not  exceeding  $5,000,  together  with  maximum 
imprisonment  of  one  year,  is  affixed  to  conviction  of  any  employee 
of  the  Commission  guilty  of  unauthorized  disclosure  of  informa- 
tion, unless  thereto  directed  by  a  court. 

Penalties  are  Cumulative. — These  penalties  are  cumulative  so 
far  as  the  various  Anti-trust  laws  and  acts  to  regulate  commerce 
are  concerned.  Section  1 1  declares  that  nothing  contained  in  the 
Federal  Trade  Commission  Act  shall  be  construed  to  prevent  or 
interfere  with  the  enforcement  of  those  laws ;  nor  shall  such  con- 
struction alter,  modify,  or  repeal  those  statutes  or  any  part 
thereof. 

8  For  provisions  creating  Bureau  of  Corporations,  see  Appendix  E, 
pages  284-5. 


CRIMINAL  PROVISIONS  OP  ANTI-TRUST  LAWS.  137 

Powers  of  Bureau  of  Corporations  Supplemented  and  Made 
Effective. — The  law  now  under  consideration  so  far  as  its  in- 
quisitorial powers  are  concerned,  is  in  substance  an  enlargement 
of  the  Act  of  1903,  creating  the  Bureau  of  Corporations.  The 
power  to  obtain  corporate  information  is  supplemented  and 
rounded  out  by  the  power  to  require  stated  and  special  reports. 
Penalties  of  a  criminal  nature  have  been  added,  to  compel  obe- 
dience to  the  law.  It  should  be  noted  that  the  Commission's  jur- 
isdiction extends  only  to  requiring  reports  from  corporations; 
therefore,  the  offense  in  that  particular  attaches  only  to  neglect  on 
the  part  of  corporate  officers  and  representatives. 

Enforcement  is  by  Court  Proceedings. — The  administrative 
and  judicial  features  of  the  statute  are  so  intimately  connected 
with  the  creation  of  a  supervising  and  directing  body  in  the  form 
of  the  Commission  with  its  distinctly  civil  powers,  that  it  was  nat- 
ural Congress  should  entrust  the  carrying  out  of  said  orders  to 
the  courts,  which  have  ample  power  at  their  command  and  can 
enforce  those  mandates  by  the  coercive  means  specially  provided 
by  this  law,  or  by  customary  writs  of  injunction  or  mandamus  or 
proceedings  for  contempt,  or  by  any  other  form  of  compulsion 
under  the  general  jurisdiction  granted  to  them  to  that  end. 

2.  CLAYTON  LAW. 

Supplements  System  of  Anti-trust  Laws. — As  a  supplement 
to  the  Anti-trust  laws,  the  Clayton  Law  would  naturally  enter  the 
campaign  equipped  with  a  complete  armory  of  weapons  for  use 
in  the  war  upon  predatory  monopolies  and  combinations  in  re- 
straint of  trade. 

Reasons  for  Non-Criminal  Methods  of  Enforcement  Stated. 
— It  should  be  understood  and  recognized,  however,  at  the  outset, 
that  certain  provisions  are  not  made  subject  to  enforcement  by 
the  rigors  of  the  criminal  law ;  and  in  those  particulars  we  shall 
look  in  vain  for  any  means  at  command,  outside  of  proceedings 
of  a  civil  nature,  to  compel  obedience  to  the  law. 

This  policy  was  deliberately  adopted  by  Congress.  As  already 
stated,  (page  132),  it  was  the  legislative  purpose  and  intent  that 
"the  harshness  of  the  criminal  law"  should  not  be  employed  in 
haste  or  without  impelling  cause.  Those  requirements  embraced 
in  this  legislation  which  are  novel  and  to  a  considerable  extent  em- 
body features  that  are  experimental  or  foreign  to  our  existing 
system  of  jurisprudence,  are  left  to  be  enforced  by  civil  measures. 


138  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

Clayton  Law  Amalgamates  Five  Proposed  Anti-trust 
Laws. — The  Clayton  Law  is  composed  in  part  of  five  proposed 
statutes9  enlarging  the  series  of  Anti-trust  laws,  and  features 
more  or  less  unrelated  except  by  propinquity,  are  therein  assem- 
bled under  one  head.  It  is  not  surprising  that  the  more  extreme 
or  untried  among  the  statutory  provisions  should  be  deferred  as 
to  operation  until  a  period  of  two  years  have  elapsed;  nor  that 
they  even  then  are  made  subject  to  the  civil  rather  than  the  crim- 
inal arm  of  the  law. 

Certain  Novel  Provisions  Considered. — Infractions  of  the 
provisions  prohibiting  price  discrimination,  conditional  or  "tying" 
contracts,  stock-ownership,  and  interlocking  directorates  (Sections 
2>  3>  7>  and  8),  are  not  made  criminal  offences.  Failure  to  obey 
an  order  against  a  defendant  "requiring  such  person  to  cease  and 
desist  from  such  violations  and  divest  itself  of  the  stock  held  or 
of  the  directors  chosen"  (Section  n,  paragraph  2),  is  not  made 
the  object  of  penalty.  Enforcement  of  such  official  mandates 
must  be  had  (paragraph  3)  through  the  machinery  of  the  United 
States  Circuit  Court  of  Appeals. 

Treating  all  infractions  of  the  Anti-trust  laws  as  tortious  acts 
and  imposing  threefold  damages  (Section  4)  does  not  denote  all 
those  injuries  to  be  crimes. 

It  appears  probable  that  the  prohibition  of  contracts  between 
corporations  dealing  in  securities  or  supplies  and  common  car- 
riers having  one  or  more  joint  directors,  etc.,  is  a  requirement 
(Section  10)  which  does  not  take  effect  as  to  any  of  its  provisions 
until  two  years  from  the  passage  of  this  law.  However  that  may 
be,  Section  10  contains  severe  penalties;  and  its  provisions  are 
intended  to  work  reform  in  dealings  between  a  common  carrier 
and  banks  and  concerns  that  sell  its  securities  or  furnish  supplies. 
This  section  was  inserted  in  compliance  with  the  recommendation 
contained  in  the  message  delivered  by  the  President  before  Con- 
gress in  January,  1914,  wherein  he  characterized  existing  methods 
as  in  effect — 

"making  those  who  borrow  and  those  who  lend  practically 
one  and  the  same,  those  who  sell  and  those  who  buy  but 

9  These  tentative  measures  were  utilized  in  varying  degrees  in  the 
preparation  of  the  Federal  Trade  Commission  Act  and  the  Clayton  Law. 
They  were  entitled:  (i)  Interstate  Trade  Commission  Bill,  (2)  Inter- 
locking Directorates  Bill,  (3)  Sherman  Law  Definitions  Bill,  (4)  Trade 
Relations  Bill,  (5)  Anti  Holding  Company  Bill. 


CRIMINAL  PROVISIONS  OF  ANTI-TRUST  LAWS.  139 

the  same  persons  trading  with  one  another  under  different 
names  and  in  different  combinations,  and  those  who  affect 
to  compete  in  fact  partners  and  masters  of  some  whole 
field  of  business." 

"Sufficient  time,"  he  continued,  "should  be  allowed,  of 
course,  in  which  to  effect  those  changes  of  organization 
without  inconvenience  or  confusion." 

The  statute  (Section  10)  translates  the  President's  words  into 
the  language  usual  in  statute  books.  The  period  of  grace  is  fixed 
at  two  years.  After  that  date,  to  wit,  October  15,  1916,  transac- 
tions between  common  carriers  engaged  in  commerce  and  dealers 
in  securities  or  supplies,  or  with  construction  companies,  are  regu- 
lated wherever  business  to  the  amount  of  more  than  $50,000  has 
been  engaged  in  between  those  concerns  within  any  one  year. 
The  prohibitions  and  regulations  affect  only  the  class  where  the 
common  carrier — 

"shall  have  upon  its  board  of  directors  or  as  its  president, 
manager,  or  as  its  purchasing  or  selling  officer,  or  agent  in 
the  particular  transaction,  any  person  who  is  at  the  same 
time  a  director,  manager,  or  purchasing  or  selling  officer 
of,  or  who  has  any  substantial  interest  in,  such  other  cor- 
poration, firm,  partnership  or  association," — 

unless  the  transaction  is  conducted  by  competitive  bidding  under 
the  direction  of  the  Interstate  Commercee  Commission.  The 
names  and  addresses  of  the  bidders  and  of  the  officers,  directors 
and  general  manager,  if  a  corporation,  and  of  the  members,  if  it 
be  a  firm  or  partnership,  must  be  given  with  the  bid. 

"Any  person  who  shall,  directly  or  indirectly,  do  or  at- 
tempt to  do  anything  to  prevent  anyone  from  bidding  or 
shall  do  any  act  to  prevent  free  and  fair  competition 
among  the  bidders  or  those  desiring  to  bid  shall  be  pun- 
ished as  prescribed  in  this  section  in  the  case  of  an  officer 
or  director." 

Every  such  common  carrier  engaging  in  those  transactions  or  pur- 
chases shall  within  thirty  days  thereafter, — 

"file  with  the  Interstate  Commerce  Commission  a  full  and 
detailed  statement  of  the  transaction  showing  the  manner 
of  the  competitive  bidding,  who  were  the  bidders,  and  the 


140  MANUAL  OF  FEDERAL,  TRADE  COMMISSION. 

names  and  addresses  of  the  directors  and  officers  of  the 
corporations  and  the  members  of  the  firm  or  partnership 
bidding;  and  whenever  the  said  Commission  shall,  after 
investigation  or  hearing,  have  reason  to  believe  the  law  has 
been  violated  in  and  about  the  said  purchases  or  transac- 
tions it  shall  transmit  all  papers  and  documents  and  its  own 
views  or  findings  regarding  the  transaction  to  the  Attorney- 
General." 

A  violation  of  this  section  will  involve  the  corporation  in  a  fine 
of  $25,000;  and  every  such  director,  agent,  manager  or  officer 
thereof, — 

"who  shall  have  knowingly  voted  for  or  directed  the  act 
constituting  such  violation  or  who  shall  have  aided  or  abet- 
ted in  such  violation" 

shall  be  adjudged  guilty  of  a  misdemeanor,  with  an  attendant  fine 
in  the  maximum  sum  of  $5,000,  and  incur  in  addition  thereto 
liability  to  imprisonment  for  one  year. 

Specific  Common  Carrier  Regulations  Considered. — Two  fea- 
tures of  this  inhibition  are  distinctive  and  invite  discussion : 

First — The  section  is  inclusive  of  all  persons  who, — 

"directly  or  indirectly,  do  or  attempt  to  do,  anything  to  pre- 
vent any  one  from  bidding,  or  shall  do  any  act  to  prevent 
free  and  independent  competition  among  the  bidders." 

Every  participant  in  such  a  transaction  becomes  as  much  con- 
cerned in  way  of  penalty  incurred,  as  though  he  were  a  principal. 

The  reason  for  this  sweeping  provision  is  the  realization  on  the 
part  of  the  public  that  waste  or  dishonesty  in  the  affairs  of  public 
service  corporations  either  cuts  down  efficiency  and  safety,  or  in- 
creases the  cost  of  operation  and  thereby  renders  more  burden- 
some charges  which  it  necessarily  devolves  upon  the  people  to 
pay. 

In  European  countries  the  problem  has  been  solved  by  govern- 
ment ownership.  In  the  United  States  the  same  question  is 
being  met  by  permitting  privately  owned  corporations  to  continue 
in  control  under  supervising  official  boards. 

This  movement  is  a  natural  and  intelligent  use  of  the  general 
laws  relating  to  the  public  health,  order,  safety  and  comfort,  and 
which,  taken  together,  represent  and  embody  that  police  power 


CRIMINAL  PROVISIONS  OF  ANTI-TRUST  LAWS.          141 

which  is  inherent  in  every  government.  It  is  a  topic  already  dis- 
cussed at  some  length, — see  remarks  at  page  65,  and  also  pages 
67-9,  supra. 

Second — The  method  adopted  is  what  may  be  termed  indirect 
prosecution.  Those  common  carriers  within  the  prescribed  class 
are  required  to  sell  securities  or  purchase  supplies  or  deal  with 
construction  or  maintenance  concerns  only  by  competitive  bids, 
which  in  turn  shall  be  accompanied  by  the  information  required 
to  ascertain  the  persons  composing  the  dealing  concerns.  Avoid- 
ance of  this  requirement  by  indirect  means  through  the  aid  of 
agents  or  third  parties,  is  prohibited ;  and  persons  participating  in 
such  indirection  or  artifice  are  subjected  to  full  penalties. 

A  detailed  statement  of  the  particular  transaction  is  required 
to  be  submitted  to  the  Interstate  Commerce  Commission  for  their 
inspection  and  approval ;  it  is  only  in  the  event  the  board  "have 
reason  to  believe  the  law  has  been  violated,"  that  all  documents 
and  papers  are  directed  to  be  filed,  together  with  its  opinion,  with 
the  Attorney-General.  Thus  the  ultimate  decision  as  to  filing  a 
formal  complaint  and  instituting  a  criminal  proceeding  rests  with 
the  chief  prosecuting  officer  of  the  government. 

General  Purpose  and  Scope  of  Section  10. — In  dealing  with 
the  subject  of  Unlawful  Restraints  and  Monopolies,  the  Senate 
Committee  on  the  Judiciary,  when  reporting  back  this  section  in 
substantially  its  present  form,  stated  in  their  report  that  they 
have — 

"recommended  a  substitute  *  *  *  which  with  the 
publicity,  competitive  bidding  and  the  supervision  of  the 
Interstate  Commerce  Commission  provided  for,  will,  it  is 
believed,  minimize,  if  not  wholly  cure  the  evil  to  be 
reached." 

The  committee,  as  their  reason  for  avoiding  an  absolute  pro- 
hibition of  all  dealings  between  concerns  where  such  entangling 
alliances  have  been  consummated,  set  forth  the  argument  that 
seasons  of  emergency  might  arise  in  the  affairs  of  the  common 
carrier  when  a  firm  or  corporation  having  joint  representatives  or 
officers  or  other  interests  in  common  would  be  the  only  or  the  most 
desirable  dealer,  and  that  conflicting  or  incompatible  positions 
would  be  rendered  extremely  unlikely  under  the  safeguards  which 
the  statute,  after  careful  revision,  affords. 

Since  Section  10  relates  to  "common  carriers  engaged  in  com- 
merce," it  is  important  to  note  the  broad  definition  of  "com- 


142  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

merce,"  appearing  in  paragraph  2,  Section  i,  of  this  law.  The 
term  seems  to  cover  the  whole  field  of  common  carriers  recog- 
nized by  the  common  law  when  engaged  in  interstate  and  foreign 
trade  and  commerce,  including  trade  and  commerce  with  the  In- 
sular Possessions  of  the  United  States.  Section  10  is  not  confined 
in  its  operation  to  incorporated  bodies;  the  language  employed 
apparently  applies  with  equal  force  to  natural  persons  who  are 
common  carriers. 

Corporate  Crime  Involves  Participating  Officer  or  Agent.— 
The  principle  recognized  in  Section  10,  to  the  effect  that  the 
crime  of  a  common  carrier  shall  be  deemed  also  that  of  its  direc- 
tor, officers  and  agents,  under  Section  14  of  the  Clayton  Law  is 
applied  to  every  corporation  which  shall  commit  a  criminal  of- 
fence against  the  Anti-trust  laws.  This  section  is  as  follows : 

"That  whenever  a  corporation  shall  violate  any  of  the 
penal  provisions  of  the  Anti-trust  laws,  such  violation  shall 
be  deemed  to  be  also  that  of  the  individual  directors,  offi- 
cers, or  agents  of  such  corporation  who  shall  have  author- 
ized, ordered  or  done  any  of  the  acts  constituting  in  whole 
or  in  part  such  violation,  and  such  violation  shall  be 
deemed  a  misdemeanor,  and  upon  conviction  thereof  of 
any  such  director,  officer,  or  agent  he  shall  be  punished  by 
a  fine  not  exceeding  $5,000,  or  by  imprisonment  not  ex- 
ceeding one  year,  or  by  both,  in  the  discretion  of  the 
court." 

History  and  Purpose  of  Individual  Responsibility  Feature 
Discussed. — While  it  is  true  that  at  first  sight  the  legislative  pol- 
icy expressed  in  the  foregoing  section  may  appear  to  consist  in 
applying  new  and  untried  measures  to  the  suppression  of  long- 
standing abuses  of  corporate  methods  and  powers,  further  and 
more  complete  investigation,  it  is  believed,  will  show  beyond  ques- 
tion that  this  policy  in  fact  is  but  a  return  to  first  principles. 

In  the  early  New  York  decisions  found  in  Johnson's  Reports 
the  corporation  was  constantly  referred  to  and  dealt  with  as  an 
aggregated  body  of  individuals — a  species  of  permanent  partner- 
ship— in  which  the  individuals  and  their  rights  could  always  be 
discerned  through  the  transparent  forms  of  chartered  power. 
Again, — under  the  common  law  no  corporation  possesses  the 
right  to  own  stock  in  another  corporation. 


CRIMINAL  PROVISIONS  OF  ANTI-TRUST  LAWS.          143 

It  will  thus  be  seen  that  instead  of  adverse  or  destructive  criti- 
cism, the  policy  outlined  above  and  characteristic  of  the  entire 
bill  really  calls  for  appreciation  and  support.  It  was  conceived 
and  born  as  the  result  of  careful  deliberations  extending  through 
numerous  sessions  of  Congress;  and  prior  to  its  advent  received 
further  and  as  it  were  parental  thought  from  committees  of  both 
the  Senate  and  House.  The  statute  as  it  now  appears  is  the  re- 
sult of  an  evolution  extending  through  five  proposed  laws,  which 
were  regularly  submitted  and  carefully  debated,  to  the  end  that 
the  best  might  be  selected  from  each. 

It  is,  accordingly,  well  within  the  facts  to  state  that  whatever 
the  ultimate  result  as  disclosed  in  practice,  (the  supreme  test  in 
legislation,  as  elsewhere,)  the  Clayton  Law  evinces  an  earnest  and 
intelligent  effort  to  comply  with  the  requirements  of  a  public  de- 
mand for  reform  in  business  methods  withtin  the  limits  specified 
therein. 

Conditions  exist  which  have  been  productive  of  trusts,  monop- 
olies and  combinations  in  restraint  of  trade,  and  which  are  al- 
most wholly  the  result  and  slow  outgrowth  of  abuses  of  corporate 
power;  and  when  the  legislators  bring  forward  and  enact  a  sys- 
tem of  Anti-trust  laws  to  fit  the  situation,  it  is  very  natural  they 
should  return  to  first  principles  and  treat  the  individuals  as  the 
substance  and  the  corporation  as  form.  This  explains  much  that 
on  the  surface  seems  strange  or  radical  in  the  Anti-trust  laws  and 
in  their  sister-statute,  the  Federal  Trade  Commission  Act. 

The  traditions  of  the  law  include  a  period  before  the  "wilder- 
ness of  precedents"  had  obscured  the  legal  horizon.  At  that 
period  partial  or  complete  stock-ownership  in  one  or  more  corpo- 
rations by  a  competing  company  would  have  been  impossible; 
and  the  device  of  a  holding  company  would  have  been  unthought 
of, — certainly  unworkable.  Joint  directorates  could  not  then  have 
grown  into  a  system  whereby  as  has  been  stated  in  a  Con- 
gressional report,  "fifty  men  in  the  United  States  control,  through 
interlocking  directorates,  forty  per  cent,  of  the  wealth  of  the 
country"  ;9  for  there  was  no  magic  or  mystery  in  a  franchise  or 
charter  that  permitted  individuals  thus  disguised  to  create  and 
maintain  practical  monopolies  in  a  manner  and  to  an  extent  which 

9  See  page  5  of  report  on  "Interstate  Trade  Commission,"  submitted  by 
Mr.  Covington  on  behalf  of  the  House  Committee  on  Interstate  and  For- 
eign Commerce,  April  14,  1914. 


144  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

the  common  law  has  always  frowned  upon  and  condemned.  If 
these  observations  are  in  point,  they  will  serve  to  indicate  the  logic 
of  the  legislation  making  it  imperative  upon  prosecuting  officers 
and  courts  to  deem  the  crime  of  a  corporation  also  that  of  its  di- 
rectors, officers  and  agents,  when  Anti-trust  laws  are  violated. 

Embezzlement  by  Common  Carrier  Officer  is  Made  a  Fel- 
ony.— Section  9  consists  of  matter  apparently  foreign  to  the  pur- 
pose and  scope  of  the  Anti-trust  laws.  It  is  out  of  place  here,  ex- 
cepting in  so  far  as  it  tends  to  emphasize  and  stamp  with  dis- 
approval acts  derogatory  to  or  destructive  of  the  best  interests, 
prosperity  and  even  existence  of  the  common  carrier  by  and 
through  the  persons  to  whom  have  been  entrusted  its  affairs  by 
confiding  shareowners.  Perhaps  it  was  in  the  minds  of  the  leg- 
islators that  by  giving  it  a  place  immediately  following  the  sec- 
tions relating  to  stock  control  and  interlocking  directorates,  the 
result  would  be  beneficial  to  the  extent  of  supplying  a  suitable 
background  for  those  regulations, — thereby  impressing  officers, 
directors  and  managers  of  common  carriers  and  corporations  with 
the  serious  nature  of  the  improved  methods  which,  taken  together, 
constitute  the  essential  principle  of  the  Anti-trust  laws. 

However  that  may  be,  the  text  of  paragraph  I,  of  Section  9,  is 
as  follows,  and  speaks  for  itself: 

"Every  president,  director,  officer  or  manager  of  any 
firm,  association  or  corporation  engaged  in  commerce  as  a 
common  carrier,  who  embezzles,  steals,  abstracts  or  will- 
fully misapplies,  or  willfully  permits  to  be  misapplied,  any 
of  the  moneys,  funds,  credits,  securities,  property  or  assets 
of  such  firm,  association  or  corporation,  arising  or  accruing 
from,  or  used  in,  such  commerce,  in  whole  or  in  part,  or 
willfully  or  knowingly  converts  the  same  to  his  own  use  or 
to  the  use  of  another,  shall  be  deemed  guilty  of  a  felony, 
and  upon  conviction  shall  be  fined  not  less  than  $500  or 
confined  in  the  penitentiary  not  less  than  one  year  or  more 
than  ten  years,  or  both,  in  the  discretion  of  the  court." 

The  term  "commerce  as  a  common  carrier,"  requires  reference 
to  Section  I,  paragraph  2,  where  "commerce"  is  defined  as  con- 
stituting interstate  and  foreign  trade  or  commerce;  also,  trade 
or  commerce  with  or  between  any  Insular  Possessions,  or  between 
such  Insular  Possessions  and  any  portion  of  the  United  States — 
it  being,  however,  expressly  stipulated  that  none  of  the  provisions 


CRIMINAL  PROVISIONS  OF  ANTI-TRUST  LAWS.          145 

of  the  Clayton  Law  should  apply  to  the  Philippine  Islands.  The 
words,  "common  carrier,"  when  unqualified  include  all  classes  of 
common  carriers,  except  those  conducted  by  an  individual. 
Whether  by  intention  or  oversight,  or  because  enterprises  owned 
or  managed  by  a  single  person  are  usually  too  small  to  receive 
legislative  notice  in  this  connection,  the  individually  owned  class 
of  common  carriers  has  been  omitted  from  the  general  prohibi- 
tion. Perhaps  this  omission  is  due  to  a  desire  to  avoid  the  ab- 
surdity of  instituting  a  criminal  charge  where  the  proof  might  and 
in  many  instances  would  disclose  the  fact  that  the  defendant  was 
disposing  of  property  exclusively  his  own. 

The  legislative  intent  is  directed  to  making  more  difficult  even 
though  it  cannot  entirely  eradicate  reckless  or  wasteful  manipu- 
lation of  corporate  assets  by  methods  which  yield  a  mysterious  or 
secret  profit  to  the  management  or  their  friends.  Instances  of 
such  abuses  of  corporate  power,  especially  in  railroad  affairs,  are 
too  recent  and  notorious  to  require  comment  here. 

The  language  employed  is  exceedingly  broad;  and  cases  seem 
certain  to  arise  where  the  government  will  feel  justified  in  charg- 
ing an  infraction  of  the  statute.  Until  those  cases  have  been 
brought  and  defendants  have  sought  to  justify  their  acts,  it  seems 
useless  to  endeavor  to  explain  or  to  limit  the  signification  of  the 
statute  as  a  whole,  or  to  anticipate  the  shades  of  meaning  or  the 
relative  importance  which  courts  will  see  in  the  individual  words. 
Such  an  attempt  would  savor  of  prophecy  and  entirely  overstep 
the  bounds  of  the  present  work. 

There  is  ground  to  question  the  power  of  Congress  to  legis- 
late regarding  acts  which  relate  to  no  department  of  government 
and  where  the  acts  are  doubtless  already  penalized  by  the  laws  of 
the  several  States.  This  doubt  relates  to  the  general  subject- 
matter  contained  in  Section  10, — dealings  with  construction,  etc., 
companies, — as  well  as  to  the  crime  defined  and  prohibited  by  Sec- 
tion 9.  However,  this  right  will  probably  be  held  to  be  similar  to 
that  lawfully  exercised  in  connection  with  the  creation  of  the  In- 
terstate Commerce  Commission. 

Of  the  severity  of  the  penalty  there  can  be  no  doubt.  No  max- 
imum sum  is  named  as  to  the  fine,  which  must  be  at  least  $500; 
while  the  prison  term  of  from  one  to  ten  years  is  sufficient  to 
give  pause  to  predatory  interests,  or  rather  to  the  individuals  who 
undertake  that  kind  of  excursions  into  or  attempt  operations  of 


10 


146  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

that  description  with,  the  assets  of  the  enterprises  committed  to 
their  charge. 

Jurisdiction  is  conferred  upon  the  United  States  District  Courts 
of  the  districts  where  the  respective  offences  are  committed. 
Paragraph  2  also  recognizes  the  jurisdictions  of  the  several  States, 
and  conviction  or  acquittal  on  the  merits  therein  is  stated  to  be  a 
bar  to  prosecution  on  the  same  charge  in  the  Federal  courts. 

Contempt  Proceedings  Specified  in  Sections  21  to  25  Non- 
Criminal. — In  Sections  21  to  25,  inclusive,  provision  is  made  for 
contempt  proceedings  to  punish  disobedience  of  court  order  by 
criminal  acts ;  but  since  Section  25  specifically  prescribes  that  the 
proceeding  shall  not  "be  a  bar  to  any  criminal  prosecution  for  the 
same  act  or  acts,"  it  follows  that  those  sections  in  legal  contempla- 
tion operate  as  a  civil  and  not  as  a  criminal  prosecution;  other- 
wise, the  defendant  would  be  placed  twice  in  jeopardy. 

Section  20  Suggestive  of  Commendatory  Court  Ruling. — 
In  passing  it  should  be  noted  that  paragraph  2  of  Section  20, 
contains  a  statement  of  a  protective  nature  which  closely  resem- 
bles the  commendatory  court  ruling  advocated  in  Chapter  V, 
pages  42-4.  After  declarations  that  peaceful  persuasion  by  or  as- 
sembling of  employees  shall  not  be  enjoined,  the  paragraph  con- 
cludes,— "nor  shall  any  of  the  acts  specified  in  this  paragraph  be 
considered  or  held  to  be  violations  of  any  law  of  the  United 
States."  These  words  certainly  imply  commendation  or  some- 
thing akin  thereto,  since  by  the  elimination  of  opposing  action, 
the  ground  and  occasion  for  any  form  of  unfavorable  notice  ap- 
pears to  have  been  removed.  The  conclusion  may  be  a  fallacy; 
but  the  argument  is  interesting,  even  though  it  is  not  profound. 

3.  THE  SHERMAN  LAW. 

Early  Construction  Reaffirmed. — This  statute  received  a  lit- 
eral construction  in  the  earlier  decisions  ;10  but  while  the  courts 
have  since  pursued  different  and  sometimes  diverging  roads,  they 
have  returned  to  their  original  starting  point,  as  appears  by  the 
judgments  of  dissolution  in  the  Standard  Oil  and  American  To- 
bacco cases.11 

IO  American  Biscuit  and  Mnfg.  Co.  v.  Klotz,  44  Fed.  721 ;  U.  S.  v. 
Addystone  Pipe  and  Steel  Co.,  85  Fed.  271. 

n  Standard  Oil  v.  U.  S.,  221  U.  S.  i ;  U.  S.  v.  American  Tobacco  Co., 
221  U.  S.  66. 


CRIMINAL  PROVISIONS  OF  ANTI-TRUST  LAWS.  147 

Original  Anti-trust  Laws  in  Large  Degree  Superseded. — 
The  Sherman  Act  and  the  Wilson  Tariff  Law  are  not,  however, 
entitled  to  the  same  prestige  which  they  formerly  possessed  as 
the  sole  exponents  of  Anti-trust  legislation.  Owing  in  large  meas- 
ure to  the  inclusion  in  party  platforms  of  demands  for  enlarge- 
ment of  the  scope  of  the  Anti-trust  laws,  the  second  session  of  the 
Sixty-third  Congress,  after  much  agitation  and  the  consideration 
of  numerous  laws  proposed  at  that  and  previous  sessions,  at  last 
yielded  to  the  public  wish  by  combining  in  one  statute  the  distinc- 
tive features  of  five  proposed  laws.12  It  was  in  this  manner  that 
the  Clayton  Law,  which  its  title  declares  to  be  supplementary  to 
existing  laws  against  unlawful  restraints  and  monopolies  (Anti- 
trust laws),  came  into  being. 

We  have  seen  that  by  its  terms  a  definition  of  "commerce"  is 
established;  price  discrimination,  conditional  or  "tying"  con- 
tracts, stock-ownership  by  corporations  direct  or  through  hold- 
ing companies  tending  to  materially  lessen  competition,  and  inter- 
locking directorates  (after  two  years),  are  declared  unlawful; 
the  statute  of  limitations  is  suspended  in  Anti-trust  actions 
brought  by  private  persons,  during  the  pendency  of  governmental 
civil  or  criminal  prosecutions  for  similar  acts ;  the  crimes  of  cor- 
porations committed  against  Anti-trust  laws  are  made  offences  of 
directors,  officers  and  agents  participating  therein  or  consenting 
thereto;  means  are  provided  whereby  individuals  may  enforce 
their  rights  thereunder  by  restraining  orders ;  and  the  courts  are 
clothed  with  ample  judicial  power  to  enforce  those  orders  by  con- 
tempt proceedings  where  neglect  or  willful  disobedience  can  be 
shown. 

A  statute  so  comprehensive  and  apparently  so  well  qualified  to 
prove  itself  effective  in  operation,  presents  numerous  advantages 
over  the  generalities  of  the  Sherman  Law,  besides  by  direct  legis- 
lation overruling  certain  limitations  by  judicial  construction  which 
have  grown  out  of  the  litigations  resulting  therefrom.  The  Clay- 
ton Law,  in  brief,  offers  simple  and  certain  means  of  preventive 
relief  or  recoupment  of  injuries  where  the  complainant  fears  or 
experiences  damage  from  prohibited  acts  of  interference  in  busi- 
ness. The  didactic  phrasing  of  the  Sherman  Law  seems  calcu- 
lated to  challenge  argument  while  leaving  the  true  meaning  still 
a  doubtful  matter, — a  characteristic  which  is  doubtless  responsible 

12  See  statutes  enumerated,  note  9,  page  138,  supra. 


148  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

for  the  complicated  nature  of  the  decisions  thereunder.  And  this 
feature  is  likewise  responsible  for  the  unwillingness  and  hesita- 
tion of  individuals  to  sail  upon  those — in  part  at  least — uncharted 
seas.  , 

Official  Body  Created  to  Enforce  Anti-trust  Laws. — Preced- 
ing the  Clayton  Law  by  a  matter  of  weeks,  the  Federal  Trade 
Commission  Act  was  passed  by  Congress  for  the  avowed  purpose 
of  supplying  a  permanent  official  body  whose  main  function  should 
be  to  enforce  the  Anti-trust  laws, — both  by  self-instituted  inves- 
tigations and  by  exercising  its  judicial  functions  in  hearing  and 
determining  charges  preferred  by  individuals.  Where  the  com- 
plainant discloses  a  meritorious  cause,  it  affords  complete  relief, 
subject  to  a  court  review  upon  the  same  facts  educed  upon  the 
trial. 

Inquiries  into  corporate  methods  at  its  own  suggestion,  or  upon 
the  direction  of  the  President  or  either  House  of  Congress,  and, 
especially,  proceedings  to  prevent  and  restrain  "unfair  methods  of 
competition  in  commerce,"  are  additional  features  of  the  Federal 
Trade  Commission's  power  under  the  creating  act.  It  is  true  that 
there  is  some  indefiniteness  in  that  measure  which  leaves  it  in 
doubt  whether  the  last-mentioned  proceedings  shall  be  instituted 
solely  upon  information  collected  by  the  Commission,  or  whether 
complaints  by  individuals  will  be  recognized  and  acted  upon ;  but 
obviously  some  documentary  or  other  satisfying  basis  for  action 
must  exist.  The  statute  reads — 

"Whenever  the  Commission  has  reason  to  believe  any 
person,  partnership,  or  corporation  has  been  or  is  using 
any  unfair  method  of  competition  in  commerce,  and  it 
shall  appear  to  the  Commission  that  a  proceeding  by  it  in 
respect  thereof  would  be  to  the  interest  of  the  public," 

it  shall  proceed  to  issue  and  serve  a  complaint  upon  the  party 
charged  with  wrongdoing.  It  is  the  means  of  knowledge,  the 
foundation  for  the  "reason  to  believe"  which  was  left  indefinite 
by  the  law-makers.  This  point  aside — and  it  is  one  which  no 
doubt  will  be  obviated  by  the  Rules  of  Practice  that  the  Commis- 
sion shall  from  time  to  time  adopt18 — the  statute  is  filled  full  of 
promise  of  relief  by  way  of  prevention.  With  that  body  in  com- 

13  For  requirements  upon  application  for  issuance  of  a  complaint, — see 
Rule  II,  page  232,  post. 


CRIMINAL  PROVISIONS  OF  ANTI-TRUST  LAWS.  149 

plete  operation,  the  occasions  for  employing  the  means  of  relief 
afforded  by  the  Sherman  Law  are  few  and  probably  will  grow  less. 

Criminal  Prosecutions  Obviated. — The  ounce  of  prevention 
has  been  supplied  by  this  supplement  of  the  Anti-trust  laws — the 
Clayton  Law — and  its  associate  measure,  the  Federal  Trade  Com- 
mission Act.  It  is  presumed  they  will  fulfil  their  allotted  pur- 
pose by  stopping  at  the  source  numerous  complaints  that  other- 
wise would  grow  into  serious  wrongs  which  in  their  turn  would 
justify  the  bringing  of  criminal  actions  under  the  Sherman  Law. 

It  may  well  be  assumed  the  Sherman  Act  will  then  to  a  great 
extent  become  functus  officio.  Supplementary  Anti-trust  legisla- 
tion has  been  provided  by  Congress  to  attain  the  desired  ends  by 
more  direct  or  less  obscure  means ;  and  the  effort  will  be  crowned 
with  at  least  partial  success  when  the  necessity  for  construction  so 
apparent  in  the  Sherman  Law,  is  obviated  thereby. 

However  that  may  be  and  whether  the  old  or  the  new  lines  of 
approach  are  found  in  practice  to  be  preferable  in  a  given  case, 
litigants  will  perceive  they  still  preserve  all  their  previously  exist- 
ing rights  under  the  former  practice ;  for  it  is  specifically  stated 
in  Section  II,  of  the  Federal  Trade  Commission  Act,  that  noth- 
ing therein  contained  shal  Ibe  construed  to  prevent,  interfere  with, 
alter,  modify  or  repeal  any  portion  of  any  Anti-trust  law. 

Punishment  Prescribed ;  Rule  of  Construction  Applicable. 
— Under  Sections  I  and  2  of  the  Sherman  Law,  combinations  and 
conspiracies  in  restraint  of  trade — also  monopolies — are  each  liable 
to  the  same  penalty,  viz:  a  fine  not  exceeding  $5,000,  with  im- 
prisonment for  one  year. 

The  Northern  Securities  and  Addystone  cases14  each  character- 
izes the  Sherman  Law  as  a  criminal  statute,  and  states  it  creates  a 
new  offense  by  penalizing  what  was  not  classified  among  criminal 
acts  under  the  common  law.  The  former  decision  holds  that  the 
strict  construction  required  in  applying  criminal  laws  does  not 
warrant  a  narrow,  technical  or  forced  construction  of  words,  to 
make  them  include  or  exclude  particular  cases ;  but  the  control- 
ling factor  must  be  the  legislative  intent. 

4.  WILSON  TARIFF  LAW. 

Provides  Anti-trust  Regulation  of  Foreign  Trade. — The  pro- 

14  U.  S.  v.  Northtrn  Securities  Co.,  193  U.  S.  197;  U.  S.  v.  Addystone 
Pipe  and  Steel  Co.,  85  Fed.  171,— affirmed  175  U.  S.  211. 


150  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

visions  of  this  act  (28  Statutes  at  Large,  570)  pertaining  to  Anti- 
trust legislation  are  contained  in  Sections  73  as  amended,  74,  75, 
76  as  amended,  and  77.  The  amendments  are  added  by  the  Act 
of  February  12,  1913  (37  Sta.  667).  For  text  of  Sections  as 
amended,  see  Appendix  D,  pages  282-3.  The  above  sections  con- 
tained in  the  Wilson  Tariff  Law,  enacted  August  4,  1894,  were 
continued  by  the  Dingley  Tariff  Act,  of  1897.  This  law  relates 
solely  to  foreign  trade. 

Sherman  Law  Provisions  Reappear  Therein. — These  provi- 
sions are  in  form  or  in  substance  adapted  from  corresponding  sec- 
tions of  the  Sherman  Act.  The  changes  are  mostly  verbal.  Sec- 
tion 73,  which  is  the  essential  feature  of  these  provisions,  appears 
never  to  have  come  before  the  courts.  Similar  requirements  are 
embodied  in  an  amplified  form  in  Sections  i  and  2  of  the  Sherman 
Act,  and  all  the  actual  cases  seem  to  have  been  brought  under  the 
latter  law. 

Section  6  of  the  Sherman  Act  providing  for  forfeiture  of  goods, 
etc.,  reappears  in  substance  in  Section  76. 

The  connection  between  these  five  sections  of  the  Wilson  Tariff 
Act,  and  the  Sherman  Law,  is  so  intimate  that  these  provisions 
have  an  important  place  in  Anti-trust  legislation,  even  though  they 
have  not  come  directly  before  the  courts  in  reported  cases. 


CHAPTER  XIII. 

IMMUNITY  OF  WITNESS  UNDER  FEDERAL  TRADE 
COMMISSION  ACT,  AND  THE  ANTI-TRUST 
LAWS. 

1.  Immunity  Proceeds  from  Recognition  of  Constitutional  Rights. 

2.  Statutes  Recognize  said  Rights. 

3.  Commission's  Orders  do  not  Confer  Immunity. 

4.  Privilege  Does  Not  Extend  to  Corporations. 

5.  Purpose  of  Privilege  Stated. 

6.  Actual  Jeopardy  Must  be  Shown. 

7.  Witness  Must  Claim  Privilege. 

8.  Enquiring  Court  or  Body  Must  Possess  Jurisdictional  Powers. 

9.  Further  Consideration  of  Immunity  Provisions. 

10.  Application  of  Principle. 

11.  Rulings  in  Immunity  Cases. 

i.  IMMUNITY  PROCEEDS  FROM  RECOGNITION  OF 
CONSTITUTIONAL  RIGHTS. 

Freedom  to  Contract  a  Qualified  Right. — Liberty  of  conduct 
and  freedom  to  contract  are  qualified  and  not  absolute  rights. 
Those  rights  imply  liability  to  reasonable  regulations  and  only  in- 
sure the  citizen  against  restraint  exercised  in  an  arbitrary  manner. 

In  both  of  these  departments  of  life  the  public  welfare, — repre- 
sented in  matters  legal  by  the  so-called  "police  power"  of  the 
State, — writes  the  supreme  code ;  and  every  right  short  of  those 
which  are  absolute  must  yield  and  take  second  place. 

Immunity  has  been  described  as  freedom  from  what  would 
otherwise  have  been  a  duty  or  burden.1  Of  course,  "immunity" 
in  the  legal  sense  is  relief  from  the  criminal  prosecution  that  might 
result  from  the  self-incriminating  testimony  of  a  witness  called  at 
the  instance  of  the  State  and  in  its  behalf.  Such  testimony,  how- 
ever, would  be  privileged  under  the  Fifth  Amendment ;  hence  the 
State  confers  "immunity"  from  criminal  prosecution  for  matters 
thus  disclosed,  and  by  that  expedient  overcomes  the  right  of  the 
proposed  witness  to  remain  silent.1* 

Accordingly,  immunity  is  the  recognition  of  an  existing  right, 
— in  fact  is  pro  tanto  an  acknowledgment  that  there  is  a  class  of 

I  Lonas  v.  State,  3  Heisk.,  (Tenn.)  287,  306,— cited  in  21  "Cyc,"  1736. 
ta  For  immunity  provisions  generally,  see  Appendix  H,  pages  289,  290. 


152  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

rights  which  the  State  has  no  power  to  interfere  with  or  destroy, 
unless  it  substitutes  something  of  equal  importance  and  value  in 
their  place  and  stead. 

These  basic  rights  are  for  the  most  part  contained  in  the  Con- 
stitution and  the  Amendments.2 

Established  by  Constitution  itself. — Without  doubt  those 
rights  are  so  well  established  under  Amendments  IV,  V,  and 
XIV,  of  the  Federal  Constitution  that  a  witness  would  be  pro- 
tected against  incriminating  himself,  even  though  no  reference 
thereto  appeared  in  any  part  of  the  Federal  Trade  Commission 
Law,  or  the  Clayton  Law.  The  Sherman  Law,  and  Sections  73  to 
77,  inclusive,  which  contain  the  Anti-trust  provisions  of  the  Wil- 
son Tariff  Law,  are  silent  on  that  point,  although  immunity  is 
conferred  by  the  Act  of  February  25,  1903  (32  Stat.  854,  903), 
making  appropriations  for  general  expenses  of  government.  Sec- 
tion 860  of  the  Federal  Revised  Statutes  and  the  Acts  of  Febru- 
ary n,  1893,  and  February  19,  1903,  were  also  legislative  pro- 
visions conferring  immunity,  but  not  to  the  extent  of  the  statute 
of  February  25,  1903,  which  covers  examinations  of  witnesses 
before  a  grand  jury,  in  addition  to  trials  in  court.  The  immunity 
laws,  however,  do  not  protect  a  witness  before  the  Federal  courts 
from  subsequent  prosecution  in  the  State  courts  for  the  offence 
disclosed;  and  this  construction  has  been  held  to  be  in  accord- 
ance with  the  constitutional  guarantee.3 

Immunity  Relates  to  Criminal  Procedure  only. — Immunity 
under  the  guarantees  in  the  Constitution  and  in  the  Federal  Im- 
munity Statutes,  relate  exclusively  to  criminal  proceedings,  un- 
less it  is  otherwise  expressly  stated  in  the  legislative  acts. 

These  general  remarks  are  preliminary  to  consideration  of  the 
subject  in  respect  to  the  Federal  Trade  Commission  Act  and  the 
interpretation  which  will  probably  be  extended  thereto  in  pro- 
ceedings instituted  under  those  laws.  For  convenience  of  refer- 
ence the  Constitutional  Amendments  will  be  inserted  in  their 
proper  place.4 

2  For  provisions  of  Constitution  applicable  to  Anti-trust  matters,  see 
Appendix  F,  pages  286-7. 

3  See  Hale  v.  Henkel,  201  U.  S.  43 ;  Nelson  v.  U.  S.,  201  U.  S.  92,  and 
other  cases  cited  under  "Immunity  Statutes,"  also  "Immunity,"  in  the 
Index-Digest  of  the  official  Federal  Anti-Trust  Decision  Reports,  Volume 
IV,  pages  590  and  678. 

4  See  note  2. 


IMMUNITY.  153 

2.  STATUTES  RECOGNIZE  SAID  RIGHTS. 

Statutory  Provisions  Stated. — Section  9,  paragraph  7  of  the 
Commission  Act  is  as  follows : 

"No  person  shall  be  excused  from  attending  and  testi- 
fying or  from  producing  documentary  evidence  before 
the  Commission  or  in  obedience  to  the  subpoena  of  the 
Commission  on  the  ground  or  for  reason  that  the  testi- 
mony or  evidence,  documentary  or  otherwise,  required  of 
him  may  tend  to  criminate  him  or  subject  him  to  a  penalty 
or  forfeiture.  But  no  natural  person  shall  be  prosecuted 
or  subjected  to  any  penalty  or  forfeiture  for  or  on  account 
of  any  transaction,  matter,  or  thing  concerning  which  he 
may  testify,  or  produce  evidence,  documentary  or  other- 
wise, before  the  Commission  in  obedience  to  a  subpoena  is- 
sued by  it.  Provided,  That  no  natural  person  so  testify- 
ing shall  be  exempt  from  prosecution  and  punishment  for 
perjury  committed  in  so  testifying." 

3.  COMMISSION'S    ORDERS    DO    NOT    CONFER    IMMU- 
NITY. 

Order  Not  Equivalent  to  Subpoena. — Immunity,  however, 
does  not  extend  its  protection  to  persons  who  are  directed  to 
"cease  and  desist  from  the  violation  of  the  law,"  etc.,  under  the 
Commission  act.  Such  direction  is  not  equivalent  to  a  subpoena, 
in  that  particular. 

"No  order  of  the  Commission  or  judgment  of  the  court 
to  enforce  the  same  shall  in  any  wise  relieve  or  absolve 
any  person,  partnership  or  corporation  from  any  liability 
under  the  antitrust  acts."  Federal  Trade  Commission  Act, 
Section  5,  paragraph  7. 

The  orders  referred  to  are  those  instituted  in  proceedings 
where  the  Commission  shall  deem  it  "to  the  interest  of  the  pub- 
lic" that  it  shall  take  steps  to  prevent  or  abate  "unfair  methods  of 
competition  in  commerce."  While  the  ability  to  serve  subpoenas 
is  a  power  which  is  very  necessary,  in  fact  absolutely  required 
to  make  effective  the  Commission's  right  to  examine  corporate 
books,  accounts,  records,  documents  in  proceedings  upon  its 
own  initiative  or  ir  certain  specified  instances  at  the  request  of 
the  President  of  either  House  of  Congress,  or  of  the  Attorney- 


154  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

General — there  is  no  authority  for  it  to  issue  any  order  except  in 
proceedings  instituted  in  respect  to  matters  "to  the  interest  of 
the  public." 

The  question  of  immunity,  accordingly,  here  relates  to  orders 
that  can  be  issued  only  in  those  semi-administrative  proceedings, 
obedience  whereof  could  not  properly  be  expected  to  convey  im- 
munity. Immunity  by  exemption  is  essentially  an  incident  per- 
taining to  criminal  actions ;  therefore  where  no  criminal  penalty 
attaches  to  disobedience  of  orders  which  are  issued  as  an  incident 
to  distinctly  civil  proceedings,  enforceable  by  civil  prosecutions  for 
contempt, — some  definite  legislative  intent  to  grant  immunity 
must  be  shown. 

Corresponding  Situation  Under  Clayton  Bill. — A  similar  pro- 
vision is  contained  in  Section  n,  paragraph  6  of  the  Clayton  Law. 
Price  discrimination,  conditional  or  "tying"  contracts,  owning  or 
controlling  stock  in  competing  corporations  and  interlocking  di- 
rectorates (Sections  2,  3,  7,  and  8),  are  each  and  all  declared  un- 
lawful acts  enforceable  by  restraining  orders  only,  although  the 
Circuit  Court  may  assume  jurisdiction  and  take  all  necessary 
steps  to  compel  obedience  thereto, — just  as  may  be  done  where 
infractions  of  the  orders  in  proceedings  initiated  by  the  Federal 
Trade  Commission  Act  are  made  to  appear. 

Provisions  of  Section  10  not  Enforcible  by  Civil  Orders 
under  Section  u. — In  the  case  of  common  carriers,  certain  trans- 
actions with  dealers  in  securities  or  supplies  where  a  joint  interest 
exists  are  prohibited  after  two  years  from  the  approval  of  the 
bill,  under  severe  criminal  penalties,  unless  competitive  bidding 
is  permitted  under  supervision  of  the  Interstate  Commerce  Com- 
mission. This  provision,  contained  in  Section  10,  is  not  made  a 
subject  for  the  Commission's  orders,  under  Section  n;  hence, 
obedience  to  those  orders  is  not  directly  connected  with  punish- 
ment for  the  guilty  acts  prohibited  by  Section  II,  and  there  would 
not  be  any  immunity  flowing  therefrom,  even  though  such  orders 
conferred  that  privilege. 

A  Precautionary  Measure. — No  doubt  the  specific  denial  of 
immunity  as  an  incident  to  orders  issued  and  served  by  the  Com- 
mission or  courts,  pursuant  to  both  the  Federal  Trade  Commis- 
sion Act  and  the  Clayton  Law  is  a  precautionary  measure  taken 
by  Congress  for  greater  security  and  certainty.  The  rule  as  to 
immunity  would  not  protect  any  person  who  performed  acts  of 


IMMUNITY.  155 

any  description  in  consequence  of  the  issuance  or  service  of  such 
orders ;  the  statute  merely  applies  to  those  mandates  the  general 
policy  of  the  non-extension  of  the  criminal  law  and  practice,  in 
cases  where  the  nature  of  the  proceeding  plainly  shows  the  matter 
is  one  for  exclusive  enforcement  by  the  machinery  of  the  civil 
side  of  the  court. 

4.  PRIVILEGE  DOES  NOT  EXTEND  TO  CORPORATIONS. 

Immunity  Confined  to  Natural  Persons. — Reverting  to  the 
phraseology  of  the  regulation  respecting  immunity  contained  in 
Section  9,  paragraph  7  of  the  Federal  Trade  Commission  Act, 
the  words  "natural  person"  relate,  of  course,  to  individuals  as  dis- 
tinguished from  corporations  of  every  description ;  so  that  no  im- 
munity would  thereby  be  extended  to  corporations,  and  the  in- 
corporated body  can  be  prosecuted  to  the  full  extent  of  the  law, 
regardless  of  subpoenas  or  testimony,  and  without  any  infraction 
of  the  Constitution.  The  use  of  the  restrictive  expression,  "nat- 
ural person,"  in  the  exempting  words  indicate  plainly  that  Con- 
gress did  not  intend  that  corporations  should  even  claim  such  a 
construction  of  the  law. 

Corporations  did  not  receive  the  benefit  of  the  exemption 
under  the  former  immunity  laws;5  and  there  is  no  reason  for 
changing  the  rule  now,  when  the  main  purpose  is  to  reach  and  to 
cure  abuses  of  corporate  methods  and  power. 

5.  PURPOSE  OF  PRIVILEGE  STATED. 

Purpose  of  Exemption. — The  object  of  the  immunity  laws  is 
to  permit  courts  and  other  judicial  or  administrative  bodies  to 
compel  witnesses  to  answer  questions  without  violating  the  pro- 
visions of  the  Constitution  regarding  self-convicting  testimony. 
Without  some  means  of  withholding  that  privilege,  accomplices 
and  persons  directly  concerned  as  principals  could  always  refuse 
to  testify,  and  thereby  the  wheels  of  justice  would,  in  very  many 
cases,  cease  to  revolve.  In  effect,  where  acts  complained  of  carry 
with  them  a  criminal  liability,  the  court,  commission  or  govern- 
ment attorney  in  a  given  case,  is  put  to  an  election  whether  the 
testimony  of  the  witness  shall  free  him  from  danger  of  prosecu- 
tion; or  whether  the  right  to  institute  future  criminal  proceed- 

5  United  States  v.  Armour  &  Co.,  142  Fed.  808. 


156  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

ings  shall  be  retained  and  the  benefit  of  the  testimony  forfeited 
as  the  consideration  for  that  right. 

Constitutional  Amendments  which  Supply  Immunity. — The 
Constitutional  Amendments  as  they  apply  will  be  presented  and 
considered. 

The  Fifth  Amendment  to  the  Constitution  of  the  United  States 
provides — 

"Nor  shall  [any  person]  be  compelled  in  any  criminal 
case  to  be  a  witness  against  himself." 

In  a  leading  case  the  court  held : 

"The  privilege  is  limited  to  criminal  matters,  but  it  is 
as  broad  as  the  mischief  against  which  it  seeks  to  guard."8 

6.  ACTUAL  JEOPARDY  MUST  BE  SHOWN. 

Only  Actual  Jeopardy  Affords  Immunity. — If  the  statute  of 
limitations  has  run  against  the  criminal  prosecution,  or  for  any 
other  effectual  reason  the  witness  is  in  no  danger  of  trial  and 
conviction  upon  such  charge,  the  Fifth  Amendment  does  not 
apply  and  the  testimony  can  be  compelled.  The  theory,  of  course, 
under  which  immunity  is  given  is  that  an  agreement  exists  where- 
by the  government  agrees  not  to  prosecute  the  witness  crim- 
inally by  reason  of  any  facts  by  him  disclosed,  nor  to  use  his 
testimony  in  any  manner  that  will  place  him  in  jeopardy, — a 
theory  which  in  its  effect  removes  the  possibility  of  conviction  and 
negatives  the  right  of  the  witness  to  remain  silent.7 

It  has  been  held  that  immunity  does  not  extend  to  witnesses 
called  by  the  defense  in  a  civil  suit ;  also,  that  a  witness  cannot 
refuse  to  testify  before  the  grand  jury,  when  there  exists  a  Fed- 
eral statute  granting  immunity,  notwithstanding  the  exemption 
is  not  so  broad  as  to  preclude  a  prosecution  in  a  State  court,  for 
the  Fourth  Amendment  is  satisfied  when  it  guards  against  fur- 
ther prosecution  within  the  same  jurisdiction  and  under  the  same 
sovereignty.8 

6  Counselman  v.  Hitchcock,  142  U.  S.  547,  12  Sup.  Ct.  195,  35  L.  Ed. 
I  no;  reversing  44  Fed.  268.    For  text  of  constitutional  provisions,  see  Ap- 
pendix F,  pages  286-7. 

7  Hale  v.  Henkel,  201  U.  S.  43,  66,  26  Sup.  Ct.  370,  50  L.  Ed.  652;  af- 
firming 139  Fed.  496. 

8  Hale  v.  Henkel,  supra. 


IMMUNITY.  157 

7.  WITNESS  MUST  CLAIM  PRIVILEGE. 

Government  Entitled  to  Know  Attitude  of  Witness. — Since 
the  government  is  put  to  an  election  as  to  whether  it  will  take 
the  benefit  of  a  witness's  testimony  or  will  preserve  its  right 
to  a  future  criminal  prosecution,  the  government's  attorney  is 
entitled  to  know :  First,  that  the  witness  is  unwilling  to  testify, 
and  Second,  that  and  how  the  desired  evidence  would  tend  to  in- 
criminate. These  facts  are  necessary  preliminaries  to  the  decision 
by  the  government,  in  the  premises. 

It  follows  as  a  corollary  to  the  foregoing  statement  that  where 
the  witness  assumes  the  position  of  a  mere  volunteer,  or  where  he 
does  not  fear  future  prosecutions  and  has  no  desire  to  claim  ex- 
emption, he  may  and  does  waive  his  privilege  by  failure  to  assert 
it  at  the  proper  time  and  in  the  manner  contemplated  by  the  im- 
munitizing  statutes.  The  words  "compelled  in  any  criminal  pro- 
ceeding to  be  a  witness  against  himself,"  contained  in  the  Fifth 
Amendment,9  plainly  imply  that  some  protest  or  objection  on  the 
part  of  the  witness  himself,  shall  precede  the  insistence  by  the 
government  that  he  shall  testify;  and  this  construction  of  the 
right  to  raise  and  enforce  the  immunity  privilege  has  been  gen- 
erally adopted  by  the  courts  and  the  authorities  on  the  subject.10 

The  witness  alone  knows  his  own  wishes  regarding  the  purpose 
of  his  testimony,  i.  e.,  whether  it  should  tend  to  exonerate  him  or 
to  confer  the  expected  immunity.  It  seems,  accordingly,  no  hard- 
ship to  exact  a  decision,  in  definite  form,  at  the  time  when  his 
testimony  is  demanded. 

8.  ENQUIRING  COURT  OR  BODY  MUST  POSSESS  JURIS- 
DICTION AL  POWERS. 

Testimony  Must  be  in  Proceedings  Relevant  and  Material 
to  the  Purpose  for  which  the  Enquiring  Body  was  Created. — 

This  very  natural  inference  from  the  provisions  of  the  statutes 
on  which  the  right  to  examine  the  witness  are  based,  was  drawn 

9  For  Fifth  Amendment — see  Appendix  F,  pages  286-7. 

For  immunity  provisions  generally,  see  Appendix  H,  pages  289,  200. 

10  U.  S.  v.  Heike,  227  U.  S.  131,  holding  that  the  Immunity  Statute 
should  be  construed  "coterminous"  with  the  privilege;    175  Fed.  852.    See 
also,  State  v.  Murphy,  128  Wis.  201 ;  Wigmore  on  Evidence,  Vol.  S,  Section 
22813. 

Effect  of  immunity  statutes  has  been  considered  in :  U.  S.  v.  Armour  & 
Co.,  142  Fed.  808;  Hale  v.  Henkel,  201  U.  S.  43;  State  v.  Rudolph,  128 
Wis.  222. 


158  MANUAL  OF  FELERAL  TRADE  COMMISSION. 

in  the  decision  in  Interstate  Commerce  Commission  v.  Harri- 
man,11  where  the  witness  was  sustained  in  refusing  to  testify.  It 
was  held  that  there  is  a  limit  to  the  power  of  a  board  or  commis- 
sion to  compel  testimony,  and  that  where  the  object  of  the  ex- 
amination or  proceeding  is  not  cognate  to  the  jurisdiction  of  that 
body,  its  subpoena  is  without  compelling  force,  and  the  witness 
may  refuse  to  testify.  In  the  Harriman  case  the  Commission 
undertook  to  supplement  a  Senate  investigation  by  an  enquiry  into 
the  methods  by  which  certain  railroad  securities  had  been  ac- 
quired and  were  held,  and  such  an  enquiry  was  deemed  by  the 
Supreme  Court  outside  of  the  quasi-judicial  functions  with  which 
the  Commission  was  endowed. 

Had  Harriman  appeared  and  testified  without  objection,  there 
can  be  no  doubt  he  would  have  been  a  mere  volunteer,  and  im- 
munity would  not  have  attached,12  for  acquiescence  in  the  as- 
sumed right  to  compel  testimony  could  not  have  rendered  him  im- 
mune. 

In  any  matter  progerly  within  the  jurisdiction  of  a  quasi- 
judicial  body,  however,  Congress  may  invest  it  with  authority  to 
require  the  attendance  and  testimony  of  witnesses,  and  the  pro- 
duction of  books,  papers,  etc. ;  and  in  such  a  matter  the  ordinary 
rules  as  to  immunity  of  course  apply.13 

9.  FURTHER  CONSIDERATION  OF  IMMUNITY  PRO- 
VISIONS. 

Immunity  Provision  in  Act  of  February  25,  1903. — The  im- 
munity provision  of  Section  9,  paragraph  7,  of  the  Federal  Trade 
Commission  Act  in  general  wording  and  effect  is  identical  with 
the  immunity  provision  contained  in  the  Federal  Appropriation 
Act  of  February  25,  loxtf,13'  which  law  is  still  in  effect  generally, 
i.  e.,  in  matters  not  connected  with  the  Anti-trust  laws. 

Immunity  by  Pardon. — Another  form  of  immunity  is  by  par- 
don. This  method  puts  the  offender  in  the  same  position  as  if 
he  had  never  done  the  illegal  act ;  but  it  cannot  close  the  judicial 
eye  to  the  fact  that  he  was  capable  of  performing  the  acts  which 
constituted  the  violation  of  law.1* 

11  211  U.  S.  407. 

12  See  generally,  In  re  Pacific  Railways  Commission,  32  Fed.  241 ;  Kil- 
bourn  v.  Thompson,  103  U.  S.  168;   In  re  Chapman,  166  U.  S.  661. 

13  Interstate   Commerce   Commission  v.  Brimson,   154  U.  S.  447;    14 
Sup.  Ct.  1125;   15  Sup.  Ct.  19;  38  L.  Ed.  1047;   reversing  53  Fed.  476. 

I3a  For  text  of  this  provision,  see  Appendix  H,  pages  289,  290. 

14  United  States  v.  Swift,  186  U.  S.  1002;   United  States  v.  Armour  & 
Co.,  142  U.  S.  808;  Thornton's  Sherman's  Anti-Trust  Law,  §  471. 


IMMUNITY.  159 

10.  APPLICATION  OF  PRINCIPLE. 

Congress  Exercises  Jurisdiction  over  All  Incorporated 
Bodies. — In  vindication  of  its  own  powers,  Congress  possesses 
and  asserts  as  to  State-chartered  corporations  the  same  authority 
it  would  have  if  the  several  corporations  owed  their  existence  to 
the  Federal  laws.  Neither  the  corporation  nor  an  officer  thereof 
can  successfully  set  up  an  examination  in  litigations  concerning 
that  body  as  a  source  of  immunity.  Especially  is  this  true  where 
the  act  complained  of  was  committed  by  the  witness  in  an  official 
capacity,  and  is  not  itself  the  subject-matter  under  investigation 
by  the  examination  proceedings.  Neither  do  official  compilations 
of  the  corporation's  records,  accounts,  etc.,  when  delivered  in 
the  form  of  a  report,  amount  to  the  giving  of  testimony  or  the 
production  of  documentary  evidence  specified  in  the  Immunity 
Act  of  February  25,  1903." 

The  foregoing  statutes  and  decisions  (which  are  for  the  most 
part  Anti-trust  cases)  were  all  enacted  or  decided  in  accordance 
with  and  to  make  effectual  the  Fifht  Amendment,  which  prohibits 
legal  procedure  that  will  "subject  [any  person]  for  the  same  of- 
fence to  be  twice  in  jeopardy  of  life  and  limb,"  i.  e.,  in  a  criminal 
action. 

The  Fourth  Amendment  Considered. — The  Fourth  Amend- 
ment is  also  in  point  here,  and  there  are  important  decisions  that 
concern  us.  That  amendment  is  in  the  following  words : 

"The  right  of  the  people  to  be  secure  in  their  persons, 
houses,  papers  and  effects,  against  unreasonable  searches 
and  seizures,  shall  not  be  violated,  and  no  warrants  shall 
issue,  but  upon  probable  cause,  supported  by  oath  or  af- 
firmation, and  particularly  describing  the  place  to  be 
searched,  and  the  persons  or  things  to  be  seized." 

We  have  seen  that  Congress  does  not  concern  itself  with  the 
source  of  the  legal  fiction  of  corporate  existence,  but  invests  this 
often  very  wn-"natural  person"  with  the  same  measure  of  respon- 
sibilities and  rights  whether  it  is  chartered  by  a  State,  or  owes  its 
franchise  to  creative  power  inherent  in  a  Territory  or  in  the  gen- 
eral government.  As  will  presently  appear,  this  policy  and  prin- 

15  Hale  v.  Henkel,  supra;  Heike  v.  United  States,  227  U.  S.  131,  33 
Sup.  Ct.  226,  57  L.  Ed.  450;  affirming  192  Fed.  83,  112  C.  C.  A.  615;  and  see 
also  Thornton  on  Sherman  Anti-trust  Act,  §§  472-3. 


160  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

ciple  of  Federal  law  and  practice  likewise  confers  upon  State- 
organized  corporations  the  protection  of  the  United  States  Con- 
stitution. Thus,  the  limitation  to  the  extent  of  seizure  and  search 
has  been  held  to  confine  the  use  of  the  subpoena  duces  tecum  to  a 
reasonable  disclosure  and  surrender  of  the  corporate  books,  rec- 
ords and  documents.  A  direction  to  produce  all  its  corporate 
books,  letters,  contracts,  and  agreements  amounts  in  legal  effect  to 
a  search  warrant  unsupported  by  oath,  is  unreasonable,  and  need 
not  be  obeyed.16 

Where  the  case  is  against  a  pooling  combination  in  control  of 
a  bridge  leading  to  a  central  city,  and  a  subpoena  duces  tecum  is 
issued  upon  a  sworn  application  demanding  in  behalf  of  an  Anti- 
trust prosecution  by  the  government,  the  production  of  specified 
records  and  documents  of  the  component  corporations  concerned 
in  the  pool,  the  court  said : 

"The  subject  of  transportation  *  *  *  of  recent 
years  *  *  *  to  a  great  extent  *  *  *  has  become 
res  publics.  I  think  the  books  and  papers  of  these  traffic 
associations  called  for  in  this  subpoena  ought  to  be  pro- 
duced and  that  the  private  interests  and  convenience  of 
those  associations,  if  any,  ought  in  a  matter  of  this  kind  to 
give  way  to  the  exigencies  growing  out  of  this  suit."17 

Immunity  Conferred  in  Aid  of  Prosecution. — We  have  seen 
(p.  156)  that  the  right  to  confer  immunity  is  given  by  law  in  aid 
of  prosecutions,  and  does  not  extend  to  the  calling  of  persons  as 
witnesses  in  aid  of  the  defense ;  and  it  has  also  been  held  in  the 
same  series  of  litigations  that  the  filing  of  a  sworn  answer  does 
not  create  any  exemption  from  prosecution,  in  favor  of  the  an- 
swering defendants.  The  court  intimates  plainly  that  in  such  a 
position  the  defendant  could  lawfully  refrain  from  filing  a  sworn 
answer,  even  where  the  bill  of  complaint  did  not  waive  an  an- 
swer under  oath.  But  when  filed,  the  situation  does  not  call  for 
such  a  forced  construction.  "The  true  criterion  must  be  the  fair 
and  reasonable  meaning — the  sense  in  which  it  is  probable  that 
Congress  used  the  chosen  words."  The  court  holds  that  the 

16  Hale  v.  Henkel,  supra. 

17  United  States  v.  Terminal  R.  Association  of  St.  Louis,  148  Fed.  487. 
While  this  subpoena  duces  tecum  was  afterward  quashed  (154  Fed.  269), 
the  decision  to  that  effect  turned  upon  the  insufficiency  of  the  originating 
petition,  and  not  upon  the  correctness  of  the  reasoning  quoted  above. 


IMMUNITY.  161 

equity  practice  by  which  the  answer  became  evidence  when  filed 
in  response  to  a  bill  of  discovery,  is  no  longer  in  effect ;  and  that 
the  answer  has  performed  its  full  function  and  purpose  when  it 
has  enabled  the  defendant  to  appear  and  submit  himself  to  the 
jurisdiction  of  a  duly  constituted  tribunal. 

"Defendants  under  such  a  bill  [in  equity]  as  was  filed 
here  are  not,  with  my  construction  of  this  immunity  statute 
[Act  of  February  25,  1903,  (32  St.  L.  904)  as  amended 
June  30,  1906  (34  St.  L.  798)  ]  in  danger  of  losing  any  con- 
stitutional rights  [prohibitory  of  criminal  prosecution]. 
They  may  absolutely  refuse  to  incriminate  themselves  by 
any  statement,  by  whatever  name  it  may  be  called,  and 
with  or  without  oath.  It  may  not  be  pleasant  to  take  this 
position,  but  such  is  the  constitutional  method  of  preserv- 
ing a  constitutional  right."18 

From  the  sense  of  these  authorities,  it  may  be  clearly  deduced 
that  witnesses — especially  co-defendants — not  called  by  the  gov- 
ernment, or  who  do  not  furnish  information  at  its  request  by  com- 
pulsion, after  claiming  their  privilege  in  a  matter  or  proceeding 
within  the  legally  established  jurisdiction  of  the  enquiring  body 
and  not  merely  within  the  scope  of  a  casual  investigation,  are 
not  rendered  immune  in  any  criminal  prosecutions  that  may  ensue 
from  the  facts  educed  upon  such  examination. 

Immunity  does  not  Extend  to  Future  Acts. — It  is  also  a  nat- 
ural and  logical  conclusion  that  immunity  secured  through  dis- 
closures of  facts  constituting  a  monopoly  in  existence  then  and 
prior  thereto,  will  not  afford  protection  for  future  conduct  of  a 
similar  description.  If  this  were  not  so,  the  immunity  anti-toxine 
would  so  permeate  the  fibre  of  the  offender  that  he  might  and 
probably  would  continue  on  his  way  rejoicing  and  commit  a  series 
of  new  offences  extending  through  the  remaining  years  of  his 
natural  life.  This  very  reasonable  and,  in  fact,  obvious  holding 
appears  in  United  States  v.  Swift,  cited  at  page  158,  supra. 

Resistance  by  Witness  not  Required. — It  is  not  requisite  that 
the  compulsion  employed  should  be  in  fact  irresistible,  to  afford 
immunity.  In  an  Anti-trust  case,  the  court  held : 

"The  contention  has  been  made  that  in  order  to  get  im- 
munity the  citizen  shall  wait  until  the  compulsion  becomes 

18  United  States  v.  Standard  Sanitary  Mfg.  Co.,  187  Fed.  229. 
ii 


1 62  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

irresistible.  That  is  the  effect  of  the  government  conten- 
tion. I  am  not  able  to  bring  my  mind  to  accept  that  doc- 
trine. *  *  *  The  law  never  puts  a  premium  on  con- 
tumacy. A  person  does  not  become  a  favored  citizen  by 
resistance  to  a  lawful  requirement.  *  *  *  This,  then, 
is  the  proposition  to  which  we  are  led:  When  an  officer 
has  a  legal  right  to  make  a  demand  upon  a  citizen,  who 
has  no  legal  right  to  refuse,  and  that  citizen  answers  under 
such  conditions,  he  answers  under  the  compulsion  of  the 
law — and  immunity  is  thereby  conferred.19 

It  will  be  interesting  to  note  that  in  the  foregoing  instance  the 
defendants  had  testified  before  the  Commissioner  of  Corporations 
in  obedience  to  a  resolution  of  the  House  of  Representatives, 
adopted  March  7,  1904,  that  no  subpoena  was  issued,  and  no  oath 
administered. 

Right  to  Immunity  Narrowed  by  Statute. — It  is  extremely 
doubtful  whether  the  courts  will  not  find  in  the  later  amendments 
a  legislative  intention  to  overrule  those  judicial  constructions  and 
to  fix  by  mandatory  legislation  the  exact  limits  of  the  right  of 
immunity.  The  amendment  of  June  30,  1906,  to  the  Act  of  Feb- 
ruary 25,  1903,  provides  that  "immunity  shall  extend  only  to  a 
natural  person  who,  in  obedience  to  a  subpoena,  gives  testimony 
under  oath  or  produces  evidence,  documentary,  or  otherwise, 
under  oath";  and  the  provisions  of  Section  9,  paragraph  7,  of 
the  Federal  Trade  Commission  Act — with  which  we  are  especially 
concerned — confines  the  exempting  right  to  natural  persons  who 
"testify  or  produce  evidence,  documentary  or  otherwise,  before 
the  Commission  in  obedience  to  a  subpoena  issued  by  it."  The 
exemption,  of  course,  relates  only  "to  any  penalty  or  forfeiture 
for  or  on  account  of  any  transaction,  matter,  or  thing  concerning 
which  he  may  testify,"  etc. 

Fair  Dealing  Seems  to  Require  Broad  Construction. — The 
older  rule  seems  more  fair,  certainly  more  equitable;  and  it  ap- 
pears hard  that  under  the  existing  condition  of  the  rulings  the 
Fifth  Amendment  does  not  afford  protection  from  prosecutions 
under  the  laws  of  the  several  States,  where  the  same  act  creates  a 
double  criminal  liability.  Of  course,  conviction  or  acquittal  be- 
fore one  tribunal  would  spell  out  freedom  from  being  placed  in 
jeopardy  through  a  second  trial  for  the  identical  offence;  but  it 

19  United  States  v.  Armour  &  Co.,  142  Fed.  808. 


IMMUNITY.  163 

seems  proper  and  almost  necessary  in  the  spirit  of  fair  play  that 
the  citizen  who  secures  complete  protection  for  himself  in  the  Fed- 
eral courts  should  not,  by  the  same  testimony,  afford  means  for  his 
own  conviction  under  the  statutes  of  a  particular  State,  especially 
where  this  incomplete  immunity  is  held  a  privilege  which  takes 
away  his  right  to  remain  silent. 

Anti-trust  Investigations  Benefited  by  Complete  Immunity. 
— Perhaps  some  broadening  of  the  immunity  statutes  will  be 
found  to  be  in  accordance  with  the  true  meaning  of  the  clemency 
which  the  Fifth  Amendment  was  created  to  afford  to  citizens. 
It  would  certainly  be  helpful  in  proceedings  to  discover  the  true 
conditions  in  respect  to  trusts,  monopolies  and  other  unlawful 
combinations  repugnant  to  the  penal  Anti-trust  laws.  The  pres- 
ent rule  is  stated  at  p.  156,  and  is  based  upon  the  controlling  de- 
cisions.20 

xi.  RULINGS  IN  IMMUNITY  CASES. 

Witness  Occupies  Dangerous  Position. — That  the  rights 
and  obligations  which  flow  from  immunity  are  questions  for 
the  judge,  would  seem  apparent;  but  in  a  situation  where 
a  judicial  mistake  might  involve  the  defendant  in  most  seri- 
ous difficulties,  it  has  been  held:  "Great  latitude  should  be 
allowed  to  him  [the  witness]  in  judging  for  himself  of  the 
effect  of  any  particular  question."21  Whenever  there  is  a  serious 
doubt  and  risk  as  to  the  question  being  one  that  is  within  the 
scope  of  the  immunity  law,  the  witness  has  a  right  to  stand  on 
his  constitutional  privileges,  notwithstanding  the  assurances  of  the 
judge  as  to  the  probable  effect  of  the  testimony. 

Immateriality  not  Question  for  Witness. — Immateriality  of 
evidence  is  not  a  complete  defence,  and  the  legal  custodian  of 
books,  etc.,  may  be  punished  for  contempt,  when  his  refusal  to 
comply  is  based  upon  that  ground.  The  order  of  commitment  is 
interlocutory  only;  and  appeal  to  the  Supreme  Court  will  not 
lie.22  . 

The  first  case  (Nelson  v.  U.  S.)  was  an  appeal  from  a  judg- 

20  Hale  v.  Henkel,  supra;   Nelson  v.  U.  S.,  201  U.  S.  920,  26  Sup.  Ct. 
358,  50  L.  Ed.  773,  affirming  52  Fed.  646 ;   see  also  U.  S.  v.  Armour  &  Co., 
supra. 

21  Foot  v.  Buchanan,  113  Fed.  156. 

22  Nelson  v.  U.  S.,  supra;   Alexander  v.  U.  S.,  201  U.  S.  117,  26  Sup. 
Ct.  356,  50  L.  Ed.  686. 


164  MANUAL  of  FEDERAL  TRADE  COMMISSION. 

ment  holding  the  witness  for  contempt,  and  the  Supreme  Court 
entertained  the  appeal  on  the  grounds:  (i)  that  it  was  a  final 
adjudication  in  a  proceeding ;  (2)  that  a  question  of  constitutional 
law  under  the  Fourth  Amendment  was  presented. 

In  the  second  case,  (Alexander  v.  U.  S.)  the  same  court  held 
that  a  mere  order  to  testify  without  further  proceedings  did  not 
carry  with  it  the  right  to  such  review.  This  ruling  was  held  to  be 
adequate  for  the  protection  of  the  witness  without  unduly  imped- 
ing the  progress  of  the  case.  In  an  earlier  case,  it  was  held  proper 
to  release  the  recalcitrant  witness  on  habeas  corpus ;  and  no  doubt 
when  the  refusal  is  founded  upon  a  reasonable  doubt  as  to  the 
legal  result  and  is  not  aggravated  nor  wilfully  contumacious  and 
obstinate,  the  court  will  permit  this  means  of  awaiting  the  decision 
of  the  appeal  outside  of  prison  walls. 

Certain  Rulings  Considered. — Before  closing  this  chapter  and 
departing  from  the  subject  of  the  immunity  which  testimony  in 
behalf  of  the  prosecution  grants  in  Anti-trust  cases,  it  might  be 
said  that  the  doctrine  of  former  jeopardy  and  the  constitutional 
guarantees  are  applicable  to  trials  in  which  misdemeanors  as  well 
as  felonies  are  concerned.23  An  indictment  or  information  so  de- 
fective as  to  be  unable  to  support  a  conviction  has  been  held  in 
England  and  the  United  States  not  a  "proceeding"  which  will 
confer  privilege  against  a  second  and  further  prosecution;  but 
the  Supreme  Court  has  held  that  this  rule  does  not  apply  where 
the  case  actually  goes  to  the  jury  and  a  verdict  of  acquittal  is  ren- 
dered ;  such  verdict  being  sufficient  to  constitute  a  bar  to  subse- 
quent prosecution  for  the  same  alleged  offence.24 

Two  criminal  proceedings  which  are  in  reality  two  charges  of 
the  same  nature — one  being  a  larger  offence — will  be  decided  by 
a  verdict  in  either ;  and  further  criminal  action  is  barred.25 

But  this  rule  does  not  prevent  a  legislative  body  from  carving 
several  distinct  crimes  out  of  one  single  act  or  transaction, — in 
such  a  case  conviction  on  one  or  both  may  be  obtained.28 

How,  or  whether,  these  rulings  can  be  harmonized,  time  alone 
can  disclose.27 

23  Berkowittz  v.  U.  S.,  93  Fed.  452,  35  C.  C.  A.  379- 

24  Bell  v.  U.  S.,  163  U.  S.  662;  see  12  "Cyc,"  pages  261-5. 

25  In  re  Bennet,  84  Fed.  324. 

26  United  States  v.  Hermison,  26  Fed.  Cas.  No.  15,  308;  3  Sawyer  556; 
see,  generally,  12  "Cyc,"  pages  382-3. 

27  For  Immunity  Statutes,  see  Appendix  H,  pages  289,  290. 


CHAPTER  XIV. 

HISTORY  AND  APPLICATION  OF  PROVISIONS  OF 
CLAYTON  LAW  RELAXING  TO  ENCOURAGE- 
MENT AND  PROTECTION  OF  LABOR. 

1.  Inception  of  Sherman  Anti-trust  Act. 

2.  Question  of  Exempting  Labor  Raised. 

3.  Opposing  Argument  by  Senator  Edmunds. 

4.  Exclusion  of  Labor  Provision  from  Sherman  Law. 

5.  Argument  Criticized. 

6.  Equality  of  Corporation  and  Labor  Union  Noted. 

7.  Lawful  Organized  Labor  Should  be  Encouraged. 

8.  Leading  Decision  Quoted. 

9.  "Strike" — Usual  Means  of  Compulsion. 

10.  Right  to  Refuse  to  Deal. 

11.  "Boycott." 

12  Protection  Afforded  by  Sections  6  and  20  of  Clayton  Law. 

13.  Provisions  Separately  Examined. 

14.  Rights  of  Labor  Confirmed. 

General  Comments. — This  subject  affords  another  instance 
where  the  legislative  mind  has  returned  to  its  first  estate  after 
wandering  far  afield.  As  in  spelling,  first  instincts  are  often  more 
dependable  than  are  the  opinions  that  result  from  deliberate  re- 
flection ;  for  the  test  of  experience  and  mature  judgment  usually 
shows  the  first  position  to  have  been  right. 

i.  INCEPTION  OF  SHERMAN  ANTI-TRUST  ACT. 

Circumstances  Attending  Enactment  of  Sherman  Law. — At 
the  time  of  the  debates  preceding  the  passage  of  the  original  Anti- 
trust act,  that  measure  was  ably  presented  and  represented  the 
combined  labors  of  some  of  the  most  acute  minds  of  that  day. 
Senator  Sherman  is  the  author  of  the  original  draft.  When  the 
law — Senate  Bill  No.  i,  of  the  Fifty-first  Congress — was  pro- 
posed on  December  4,  1889,  it  was  referred  to  the  Senate  Com- 
mittee on  Finance,  of  which  Senator  Morrill  at  that  time  was 
chairman,  although  Senator  Sherman  was  the  most  active  mem- 
ber. 

On  January  14,  1890,  Senator  Sherman  reported  the  Sherman 
Bill  to  the  Senate  from  the  Finance  Committee,  and  on  February 
2/th,  he  moved  the  Senate  to  proceed  to  its  consideration.  That 

165 


166  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

motion  having  been  adopted,  Senator  George,  of  Mississippi,  an 
able  lawyer  and  member  of  the  Judiciary  Committee,  entered  at 
once  upon  the  discussion  of  its  salient  features.  In  his  argument 
the  speaker  pointed  out  the  probability  that  the  proposed  statute 
could  be  successfully  attacked  because,  ( i )  it  assumed  to  regulate 
the  production,  etc.,  of  some  commodities  within  the  limits  of 
individual  States;  (2)  it  made  possible  the  doing  of  acts  outside 
of  the  United  States  which  were  prohibited  within  the  domestic 
field.  This  argument  was  so  persuasive  that  many  Senators  were 
convinced  the  bill  required  material  amendment  prior  to  its  enact- 
ment into  law. 

Consideration  was  resumed  on  March  2ist;  whereupon  Sena- 
tor Sherman  informed  the  Senate  that  the  Committee  on  Finance, 
after  conference,  had  decided  to  present  a  substitute  for  the  pend- 
ing measure.  That  substitute  struck  out  all  the  bill  after  the  enact- 
ing claus-e  and  re-stated  its  provisions  in  a  form  intended  to 
strengthen  the  constitutionality  thereof  by  confining  its  prohibi- 
tions to  persons  or  corporations  residing  in  different  States  or 
Territories  of  the  United  States  or  foreign  countries.  (For  con- 
venience of  comparison,  see  the  two  drafts  printed  in  full  in  Ap- 
pendix K,  pages  297-9.) 

2.  QUESTION  OF  EXEMPTING  LABOR  RAISED. 

Amendment  Exempting  Labor  Organizations  Submitted. — 
Among  various  amendments  one  was  offered  to  the  effect  that  the 
act  should  not  be  construed  to  apply  to  any  agreements  or  condi- 
tions among  laboring  men  made  for  the  purpose  of  lessening  their 
hours  of  labor  or  of  increasing  their  wages,  nor  to  agreements  or 
combination  of  persons  engaged  in  horticulture  or  agriculture 
made  with  a  like  purpose  of  enhancing  the  prices  of  the  articles 
they  produce.  Thus  early, — in  fact,  at  the  very  inception  of  the 
original  Anti-trust  law, — the  question  of  the  necessity  for  Pro- 
visions Relating  to  the  Encouragement  and  Protection  of  Labor 
(the  subject-matter  of  this  chapter)  was  squarely  presented  to 
Congress  for  consideration  and  action.  Upon  that  important 
theme  the  main  disputant  appears  from  the  official  record  to  have 
been  Senator  Edmunds. 

3.  OPPOSING  ARGUMENT  BY  SENATOR  EDMUNDS. 

Exemption  of  Organized  Labor  Opposed  in  Senate. — He  ap- 
proached the  measure  as  a  whole  in  a  friendly  attitude  and  advo- 


LABOR.  167 

cated  its  passage  in  substantially  the  form  in  which  it  was  pre- 
sented to  the  Senate;  but  on  the  subject  of  so  delimiting  its  scope 
as  to  exempt  organized  labor  from  the  prohibitive  clauses,  he  de- 
clared himself  strongly  and  unalterably  opposed.  He  said: 

"I  shall  be  glad,  within  the  constitutional  limits,  which 
are  narrow  but  clear,  in  the  regulation  of  commerce  to  go 
as  far  as  Congress  has  the  power  to  go  in  breaking  up 
these  great  monopolies  that  exist  to  the  detriment  and  in- 
jury of  mankind  *  *  *  But  I  can  go  no  further.  I 
do  not  wish  to  hold  out  a  false  hope  to  the  people  of  the 
United  States,  be  they  farmers  or  mere  workingmen,  as 
they  are  sometimes  called  *  *  *  If  he  [the  working 
man  and  wage-earner]  gets  that  wage  paid  to  him,  the 
thing  that  he  has  done  must  be  worth  the  money  that  is 
paid  to  him  for  doing  it,  or  his  employer  will  fail,  and  then 
he  will  have  nothing  to  do  and  the  business  will  stop.  That 
sort  of  thing  has  happened  a  thousand  times  and  is  happen- 
ing every  day  *  *  *." 

Opposing  Argument,  Continued. — Throughout  the  discussion 
Senator  Edmunds  views  it  from  the  commercial  standpoint,  and 
founds  his  opposition  on  the  supposed  inequality  that  would 
ensue  if  capital  is  hampered  while  the  activities  of  labor  are  per- 
mitted to  continue  unrestrained.  In  the  course  of  the  argument, 
though  at  an  earlier  place,  he  declares  : 

"The  fact  is  that  this  matter  of  capital,  as  it  is  called,  of 
business,  and  of  labor  is  an  equation,  and  you  cannot  dis- 
turb one  side  of  the  equation  without  disturbing  the  other. 
*  *  *  If  we  are  to  have  equality,  as  we  ought  to  have, 
if  the  combination  on  one  side  is  to  be  prohibited,  the  com- 
bination on  the  other  side  must  be  prohibited  or  there  will 
be  certain  destruction  in  the  end."1 

4.  EXCLUSION  OF  LABOR  PROVISION  FROM  SHERMAN 
LAW. 

Argument  Prevails ;  Labor  Clause  Ignored. — The  argument 
thus  set  forth  and  the  reasoning  therein  expounded  met  with  ap- 
proval ;  at  least,  no  account  is  recorded  of  any  effective  presenta- 

I  Bills  and  Debates  on  Trusts,  page  290;  21  Cong.  Record,  page  2727; 
see  Thornton,  "Sherman  Anti-Trust  Act,"  pages  26-7. 


1 68  MANUAL  of  FEDERAL  TRADE  COMMISSION. 

tion  of  the  matter  from  the  position  of  the  wage  earner.  The  bill, 
on  March  27th,  with  its  proposed  amendments  was  referred  to 
the  Judiciary  Committee,  of  which  Senator  Edmunds  was  chair- 
man. It  was  there  redrafted  by  Senator  Hoar,  a  member  of  the 
committee,  and  on  April  8th  the  law  was  passed  by  the  Senate 
upon  the  recommendation  of  Senator  Sherman,  its  advocate  and 
sponsor,  with  only  one  dissenting  vote.  It  received  the  unan- 
imous vote  of  the  House,  and  upon  approval  by  President  Harri- 
son, July  2,  1890,  became  of  binding  force  and  effect. 

Argument  Advanced  not  Convincing. — In  the  light  of  history 
and  of  fuller  study  of  the  principles  that  govern  the  relations  of 
employer  and  employee,  the  reasons  advanced  when  arguing 
against  the  exemption  of  labor  organizations  from  the  provisions 
of  the  Sherman  Act  seem  rather  immature  in  the  light  of  subse- 
quent developments  and  experience.  The  prevailing  argument  in 
opposition  to  that  amendment  was  left  without  material  contradic- 
tion, although  the  answering  idea  might  well  have  occurred  to  the 
Senators  engaged  in  that  conference, — so  far-reaching  in  its  ef- 
fects upon  the  commercial  and  social  life  of  the  nation. 

5.  ARGUMENT  CRITICIZED. 

Defect  in  Argument  Noted.— The  fact  is  that  the  "equality" 
and  the  "equation"  described  in  the  foregoing  quotation  do  not  set 
forth  the  case  with  the  accuracy  and  acumen  that  might  be  ex- 
pected in  a  quarter  so  distinguished.  The  speaker  and  advocate 
overlooked  the  obvious — almost  self -apparent — factor  that  every 
corporation  in  and  of  itself  is  a  legally  constituted  and  publicly 
recognized  combination  of  individuals,  supplemented  by  the 
crystallized  form  of  prior  labor  which  we  call  capital.  It  is 
therefore,  already  a  "combination" ;  and  only  awaits  a  predatory 
inclination  to  become  by  collective  power  and  weight  of  numbers, 
a  member  of  and  perhaps  an  active  participant  in  the  class  of  re- 
straints of  trade  which  the  Anti-trust  statutes  frown  upon  and 
illegalize. 

Labor  Should  Receive  Legislative  Encouragement. — The 
training  and  effort  involved  in  the  creation  and  management 
of  the  modern  business  corporation  is  presumably  much  more  ex- 
tensive and  exacting  than  is  called  for  in  conducting  the  affairs  of 
an  association  of  workers,  and  the  accumulation  of  capital  is  so 
far  greater,  that  Congress  is  warranted,  in  the  light  of  experience, 
in  placing  restraints  about  the  one  that  may  not  be  applicable  to 
the  other.  Legislation  for  the  encouragement  of  one  class  may  be 


LABOR.  169 

justified  on  the  principle  that  self-help  which  tends  to  thrift  and  to 
higher  averages  of  citizenship  is  beneficial;  whereas  the  selfish 
aggrandizement  of  capital  and  property  in  its  various  forms  is  a 
formidable  thing  of  itself,  although  a  means  of  advancing  the  na- 
tion's wealth. 

6.  EQUALITY  OF  CORPORATION  AND  LABOR  UNION 
NOTED. 

Organized  Labor  and  Corporation  on  Equal  Footing. — In 

brief,  the  combination  of  labor  in  the  form  of  a  trades  union — 
not  the  individual  worker  as  a  unit — meets  a  combination  of  in- 
dividuals in  the  form  of  an  incorporated  body  on  equal  terms,  and 
together  they  constitute  the  "equation"  referred  to  by  Senator 
Edmunds.  The  "trust"  has  re-combined  a  number  of  corpora- 
tions under  a  single  control,  and  in  consequence  it  is  not  on  equal 
terms  with  the  trades  union,  when  the  latter  comprises  only  a 
single  group  of  wage  earners.  It  is  only  where  a  federation  of 
extensive  or  world-wide  scope  occupies  a  vast  territory  that  the 
combination  of  workmen  becomes  equalized  to  a  trust. 

7.  LAWFUL  ORGANIZED  LABOR  SHOULD  BE  ENCOUR- 
AGED. 

Occasions  for  Restraint  Compared. — The  incorporated  body, 
when  in  the  hands  of  able,  aggressive  and  unscrupulous  individ- 
uals, has  shown  itself  an  organ  of  oppression,  at  once  elusive 
and  capable  of  amassing  vast  wealth  while  violating  the  policy  of 
the  laws,  although  scrupulous  in  matters  of  mere  form ;  the  com- 
bination of  workmen  on  the  contrary,  has  shown  itself  principally 
concerned  with  maintaining  or  enhancing  the  rate  of  wages  or  re- 
ducing the  hours  of  labor, — both  benefits  when  conditions  war- 
rant, as  they  tend  to  increase  the  efficiency,  welfare  and  happiness 
of  the  general  populace.1*  Labor  organizations  have,  with  few  ex- 
ceptions, displayed  a  tendency  to  conform  to  the  requirements  of 
law.  It  is  upon  this  record  that  Congress  has  reversed  its  attitude 
and  has  decreed, — "nor  shall  such  organizations,  or  the  members 
thereof,  be  held  or  construed  to  be  illegal  combinations  or  con- 
spiracies in  restraint  of  trade,  under  the  Anti-trust  laws"  (Clay- 
ton Law,  Section  6) .  However,  it  should  be  noted  that  the  consti- 
tutional right  of  Congress  to  make  this  exception  has  not  been  ju- 
dicially determined. 

la  Thus,  combinations  of  workmen  for  their  own  reasonable  protection 
as  such,  are  excepted  from  the  criminal  provisions  of  the  Canadian  Anti- 
trust statute.  63-64  V,  C.  46,  §  3. 


170  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

8.  LEADING  DECISION  QUOTED. 

Subject  as  Presented  in  Leading  Decision. — Perhaps,  with- 
out justly  incurring  the  charge  of  overstaying  our  right  to  dwell 
upon  the  introductory  portion  of  the  subject  embraced  within  this 
chapter,  it  may  be  well  to  quote  the  able  disquisition  presented  in 
the  dissenting  opinion  of  Judge  Caldwell,  written  in  the  year 
1897 :2 

"While  laborers,  by  the  application  to  them  of  the  doc- 
trine we  are  considering,  are  reduced  to  individual  action, 
it  is  not  so  with  the  forces  arrayed  against  them.  A  cor- 
poration is  an  association  of  individuals  for  combined  ac- 
tion; trusts  are  corporations  combined  together  for  the 
very  purpose  of  collective  action  and  boycotting ;  and  cap- 
ital, which  is  the  product  of  labor,  is  in  itself  a  powerful 
collective  force.  Indeed,  according  to  this  supposed  rule, 
every  corporation  and  trust  in  the  country  is  an  unlawful 
combination,  for  while  its  business  may  be  of  a  kind  that 
its  individual  members,  each  acting  for  himself,  might  law- 
fully conduct,  the  moment  they  enter  into  a  combination 
to  do  that  same  thing  by  their  combined  effort,  the  com- 
bination becomes  an  unlawful  conspiracy.  But  the  rule  is 
never  so  applied. 

Corporations  and  trusts  and  other  combinations  of  in- 
dividuals and  aggregations  of  capital  extend  themselves 
right  and  left  through  the  entire  community  *  *  * 
crushing  out  all  small  dealers  and  producers,  stifling  com- 
petition, establish  monopolies,  reducing  the  wages  of  the 
laborer,  raising  the  price  of  food  *  *  *  ;  and  all 
these  things  are  justified  as  a  legitimate  result  of  the 
evolution  of  industries  resulting  from  new  social  and  eco- 
nomic conditions,  and  of  the  right  of  every  man  to  carry  on 
his  business  as  he  sees  fit,  and  of  lawful  competition.  On 
the  other  hand,  when  laborers  combine  to  maintain  or 
raise  their  wages  or  otherwise  to  better  their  condition  or 
to  protect  themselves  from  oppression  or  to  attempt  to 
overcome  competition  with  their  labor  or  the  products  of 
their  labor  in  order  that  they  may  continue  to  have  employ- 
ment, and  live,  their  action,  however  open,  peaceful  and 

2  Hopkins  v.  Oxley  Stove  Co.,  83  Fed.  912. 


lyABOR.  I/I 

orderly,  is  branded  as  a  'conspiracy.'  What  is  'competi- 
tion' when  done  by  capital,  is  'conspiracy'  when  done  by 
laborers.  No  amount  of  verbal  dexterity  can  conceal  or 
justify  this  glaring  discrimination.  If  the  vast  aggrega- 
tion and  collective  action  of  capital  is  not  accompanied  by 
a  corresponding  organization  and  collective  action  of  labor, 
capital  will  speedily  become  proprietor  of  the  wage  earners 
as  well  as  the  recipient  of  the  profits  of  their  labor.  This 
result  can  only  be  averted  by  some  sort  of  organization 
that  will  secure  the  collective  action  of  wage  earners.  This 
is  demanded,  not  in  the  interest  of  the  wage  earners  alone, 
but  by  the  highest  considerations  of  public  policy." 

Owing  to  the  plain  statement  thus  afforded  of  the  attitude 
which  has  prevailed  in  labor  legislation  as  contained  in  the  Clay- 
ton Law,  it  has  been  thought  not  only  wise  but  a  convenience  to 
include  an  extract  of  some  length  from  the  foregoing  decision. 
While  it  suggests  the  ardor  of  combat,  it  also  sets  forth  in  con- 
densed form  the  rules  and  principles  of  thought  which  have  over- 
come and  replaced  the  doubt  and  distrust  and  the  paternalism  so 
apparent  in  the  arguments  advanced  by  Senator  Edmunds,  at  the 
time  when  the  Anti-trust  laws  had  their  inception.  That  Senator 
Edmunds  was  the  exponent  of  a  class  is  shown  by  the  nearly 
unanimous  approval  of  the  bill  which  was  prepared  under  his 
immediate  scrutiny  as  the  chairman  of  the  Judiciary  Committee, 
to  which  it  was  referred  for  its  final  redrafting,  preparatory  to 
actual  enactment. 

Useful  Comparison  of  Contrasting  Sentiments. — The  speech 
of  Senator  Edmunds,  in  substance,  so  far  as  it  is  relevant  to  this 
topic,  appears  at  page  167 ;  and  comparison  thereof  with  the  glow- 
ing paragraphs  from  Judge  Caldwell's  decision,  may  be  useful  in 
this  connection.  Each  of  these  sentiments  is  typical  of  a  class; 
and  their  inclusion  here  will  avoid  the  necessity  for  presenting  a 
cumulative  weight  of  authorities. 

Trades  Unions  Operate  by  Distinctive  Methods. — Trades 
unions  operate  in  ways  unlike  the  methods  of  incorporated  bodies ; 
and  it  is  not  the  slow  increase  by  steady  growth  but  the  sudden 
display  of  strength  through  numbers  and  organization  that  has 
rendered  the  latter  formidable.  There  is  usually  a  sense  of  sur- 
prise when  the  trades  union  joins  issue  with  a  company  of  great 
resources,  and  the  artizan  through  the  power  of  combined  labor 


172  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

is  able  to  dictate  terms  or  at  least  to  insure  respectful  attention  to 
his  requests. 

9.  "STRIKE"— USUAL  MEANS  OF  COMPULSION. 

The  Strike  is  the  Usual  Method  of  Attack. — The  weapon  of 
attack  is  almost  always  the  same,  and  this  brings  us  to  the  con- 
sideration of  strikes  and  boycotts, — acts  which  the  courts  have 
sometimes  sought  to  restrain  or  punish  by  injunctions  and  pro- 
ceedings for  contempt  of  court. 

Strike  Defined. — A  strike  is  defined  as  an  abstaining  from 
work  by  a  body  of  workmen  to  compel  an  increase  in  wages  or  to 
prevent  a  reduction,  or  to  require  the  employer  to  grant  some 
other  form  of  demand.  This  means  of  bringing  pressure  to  bear 
is  so  well  recognized  and  legitimatized  that  unless  violence  or 
some  ulterior  purpose  is  disclosed,  the  courts  will  not  interfere  in 
the  dispute. 

10.  RIGHT  TO  REFUSE  TO  DEAL. 

Right  to  Refuse  to  Deal. — The  test  of  liability,  as  has  been 
well  said  in  Cooke,3  turns  on  whether  the  act  was  the  natural  inci- 
dent or  outgrowth  of  some  lawful  relation.  This  lawful  relation 
in  this  connection  is  the  right  to  refuse  to  deal.  The  subject  is  a 
broad  one  and  includes  general  commercial  relations  quite  inde- 
pendent of  labor  questions  or  disputes ;  but  both  in  logic  and  in 
law  the  nature  and  extent  of  the  duty  an  employee  owes  to  his 
employer,  when  a  disagreement  as  to  terms  and  conditions  of 
service  arises,  must  be  measured  by  the  latitude  of  lawful  action 
that  established  principles  allow. 

While  there  has  been  a  great  divergence  of  opinion  in  different 
courts  and  jurisdictions,  and  even  among  individual  members  of 
the  same  judicial  body — owing  apparently  to  the  personal  attitude 
of  the  particular  judge  on  labor  questions — some  uniformity  is 
at  last  discernible,  and  general  rules  may  now  be  deduced. 
The  test  of  malice  or  malicious  intent  is  gaining  ground  as  a 
means  of  determining  the  legality  of  acts  of  labor  organizations, 
when  directed  at  third  parties  (Cooke,  page  40).  The  same  rea- 
soning is  implied  to  a  considerable  extent  in  the  restrictive  rights 
granted  to  the  Federal  Trade  Commission  covering  "any  unfair 

3  "Combinations,  Monopolies  and  Labor  Unions,"  p.  15. 


LABOR.  173 

method  of  competition  in  commerce"  (Federal  Trade  Commis- 
sion Act,  Section  5),  for  the  element  of  unfairness  must  consist 
very  largely  in  the  intent  of  acts  which  taken  together  grow  into 
the  dignity  of  a  "method" ;  but  it  is  seen  more  distinctly  in  the 
provisions  of  Section  3  of  the  Clayton  Law  prohibiting  "tying"  or 
conditional  contracts,  leases  or  sales,  and  in  other  sections  thereof 
which  are  intended  to  prevent  or  destroy  monopolies  and  re- 
straints of  trade. 

The  presence  of  malice,  however,  should  not  be  presumed 
merely  because  workmen  individually  or  collectively  exert  them- 
selves and  assert  every  lawful  right  to  better  the  conditions  of 
their  employment ;  nor  should  courts  grant  restraining  orders  in- 
tended to  compel  a  continuation  of  the  relationship  of  employer 
and  employee;  and  this  principle  applies  with  particular  force 
in  cases  that  arise  where  the  dispute  is  confined  to  the  orig- 
inal parties  and  no  element  of  general  public  interest  enters  in. 
Judge  Harlan,  speaking  for  the  court,  has  well  said: 

"It  would  be  an  invasion  of  one's  natural  liberty  to  com- 
pel him  to  work  for  or  to  remain  in  the  personal  service  of 
another.  One  who  is  placed  under  such  restraint  is  in  a 
condition  of  involuntary  servitude — a  condition  which  the 
supreme  law  of  the  land  declares  shall  not  exist  within  the 
United  States,  or  in  any  place  subject  to  their  jurisdiction. 
*  *  *  Relief  of  that  character  has  always  been  re- 
garded as  impracticable.* 

The  provisions  of  Section  6  of  the  Clayton  Law  negatives  the 
judicial  attitude  that  labor  is  an  "article  of  commerce" ;  and 
probably  the  old  line  of  decisions  no  longer  apply  in  full  measure. 

In  a  leading  case,  the  modern  rule which  is  convincing,  and 

should  prevail — is  thus  set  forth : 

"The  refusal  to  maintain  trade  relations  with  any  indi- 
vidual is  an  inherent  right  which  every  person  may  exer- 
cise lawfully,  for  reasons  he  deems  sufficient  or  for  no  rea- 
son whatever.  *  *  * 

"It  is  a  part  of  the  liberty  of  action  which  the  Constitu- 
tions, State  and  Federal,  guarantee  to  the  citizen."5 

4  Arthur  v.  Oakes,  65  Fed.  310,  317,  n  C.  C.  A.  209,  25  L.  R.  A.  414. 

5  Locker  v.  American  Tobacco  Co.,  121  N.  Y.  App.  Div.  443,  106  N.  Y. 
Supp.  115  (1907). 


174  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

Such  is  the  principle  as  to  trade  relations  in  general ;  and  as  we 
have  seen,  it  is  applicable  wherever  the  act  is  the  natural  incident 
or  outgrowth  of  any  lawful  relation,  such  as  that  of  employer  and 
employee. 

A  less  indulgent  attitude  by  the  courts  has  developed  into  a 
different  though  not  very  clearly  defined  rule  where  sympathetic 
strikes  and  boycotts  are  disclosed  as  an  outgrowth  of  labor  dis- 
putes. The  extreme  in  this  effort  to  confine  the  employment  of 
strike  methods  to  pressure  by  the  employee  exerted  directly  upon 
and  against  the  employer  is  found  in  decisions  by  the  Massachu- 
setts courts.  Thus,  in  1906,  it  was  declared : 

"Organized  labor's  right  of  coercion  and  compulsion  is 
limited  to  strikes  against  persons  with  whom  the  organiza- 
tion has  a  trade  dispute,  or  to  put  it  in  another  way,  we  are 
of  opinion  that  a  strike  against  A,  with  whom  .the  strikers 
have  no  trade  dispute,  to  compel  A  to  force  B  to  yield  to 
the  strikers'  demands,  is  an  unjustifiable  interference  with 
the  right  of  A  to  pursue  his  calling  as  he  thinks  best."8 

In  the  same  year  that  court  held : 

"Such  a  strike  would  be  a  strike  in  the  nature  of  a  sym- 
pathetic strike,  that  is  to  say,  it  is  a  strike  not  to  forward 
the  common  interests  of  the  strikers,  but  to  forward  the 
interests  of  an  individual  employee  in  respect  to  a  griev- 
ance between  him  and  his  employer  where  no  contract  of 
employment  exists."7 

A  like  tendency  is  discernable  in  a  Federal  decision : 

"All  the  employees  had  a  right  to  quit  their  employment, 
but  they  had  no  right  to  combine  to  quit  in  order  thereby 
to  compel  their  employer  to  withdraw  from  a  mutually 
profitable  relation  with  a  third  person  for  the  purpose  of 
injuring  that  third  person,  when  the  relation  thus  sought 
to  be  broken  had  no  effect  whatever  on  the  character  or 
reward  of  their  service."8 

6  Pickett  v.  Walsh,  192  Mass.  572,  78  N.  E.  753,  6  L.  R.  A.  N.  S.  1067; 
116  Am.  St.  Rep.  272.    See  a  careful  discussion  of  this  case  and  kindred 
decisions  in  42  American  Law  Review,  1908,  page  706. 

7  Reynolds  v.  Davis,  198  Mass.  294  (1908),  84  N.  E.  457,  17  L.  R.  A. 
N.  S.  162. 

8  Thomas  v.  Cincinnati,  N.  0.  &  T,  P,  Ry.  Co.,  62  Fed.  803,  818  (1894). 


LABOR.  175 

And  in  a  leading  Anti-trust  decision  in  1893,  District  Judge 
Speer  took  occasion  to  reflect  in  severe  terms  upon  an  organized 
body  of  railroad  employees  who  repudiated  their  contract  of  em- 
ployment, "because  of  real  or  alleged  grievances,  which  some 
other  person  or  corporation,  not  a  party  to  the  contract,  inflicts 
or  is  alleged  to  inflict,  not  upon  a  party  to  the  contract  but  upon 
somebody  else."9 

Cases  in  large  numbers  can  be  found  which  contain  the  fore- 
going doctrine.  It  was  not  passed  upon  directly  in  the  Debs  case,10 
since  the  Supreme  Court  was  contented  to  base  its  finding  therein 
upon  the  element  of  restraint  of  interstate  trade  appearing  in  that 
situation;  and  in  Loewe  v.  Lawler,11  while  the  doctrine  was  in 
the  main  adopted  and  applied,  it  was  so  quickly  overruled  by  Con- 
gress through  recent  Anti-trust  laws  that  it  can  hardly  be  said  to 
have  gained  a  foothold  in  the  law  of  the  land,  as  acknowledged 
and  declared  by  that  court.  The  New  York  Court  of  Appeals, 
in  a  leading  case  where  the  decision,  however,  does  not  necessarily 
rest  upon  this  ground,  states  the  proposition  contained  in  the  fore- 
going decision  and  refutes  it.  As  to  the  doctrine  that  "if  the  mo- 
tive be  unlawful  or  be  not  for  the  good  of  the  organization  or 
some  of  its  members,  but  prompted  wholly  by  malice  and  a  de- 
sire to  injure  others,  then  an  act  that  would  be  otherwise  legal  be- 
comes unlawful,"  the  court  says : 

"I  do  not  assent  to  this  proposition,  although  there  is 
authority  for  it.  It  seems  to  me  illogical  and  little  short  of 
absurd  to  say  that  the  every  day  acts  of  the  business  world, 
apparently  within  the  domain  of  competition,  may  be  either 
lawful  or  unlawful,  according  to  the  motive  of  the 
actor."12 

The  fact  that  the  treatment  of  this  subject  reflects  the  senti- 
ments and  no  doubt  indicates  the  environment  and  predelictions 
of  the  individual  judge,  is  shown  by  the  expression  contained  in 
a  Massachusetts  case  where  the  right  of  an  individual  to  pursue 
his  calling  without  restriction  arose : 

"Speaking  generally,  however,  competition  in  business 

9  Waterhouse  v.  Comer,  55  Fed.  157. 

10  158  U.  S.  564,  15  Sup.  Ct.  900,  39  Fed.  1092. 
n  Danbury  Hat  Case,  235  U.  S.  522. 

12  National  Protective  Assoc.  v.  Gumming,  170  N.  Y.  315,  326,  63  N.  E. 
369,  371,  58  S.  R.  A.  135,  140,  88  Am.  St.  Rep.  p.  648  (1902). 


176  MANUAL  of  FEDERAL  TRADE  COMMISSION. 

is  permitted,  although  frequently  disastrous  to  those  en- 
gaged in  it.  It  is  always  selfish,  often  sharp,  and  some- 
times deadly."13 

This  case  and  doctrine  is  mentioned,  approved  and  followed  by 
Justice  Holmes  (now  of  the  United  States  Supreme  Court)  in 
Pickett  v.  Walsh  (192  Mass.  572).  The  restrictive  doctrine,  in 
opposition  to  that  of  wid-e  latitude  for  action  by  organized  labor, 
is  in  general  found  to  prevail  in  the  Federal  courts,  though  their 
decisions  are  frequently  based  upon  the  public  rights  those  tribu- 
nals undertook  to  enforce  by  way  of  the  Anti-trust  laws  against 
restraint  of  trade  and  monopoly ;  and  this  tendency  is  particular- 
ly apparent  where  strikes  by  the  employees  of  railroads  are  con- 
cerned. Some  of  the  earlier  of  the  modern  cases  turn  upon  the 
statutes  against  the  obstruction  of  the  mails ;  but  the  tendency  to 
limit  the  right  to  refuse  to  deal,  is  apparent  throughout.  At  least, 
such  an  impression  is  conveyed  by  perusal  of  the  cases  as  a  whole. 

What  attitude  Congress  assumed,  and  which  side  it  undertook 
to  defend  in  this  conflict  of  judicial  views  upon  the  respective 
rights  of  parties  involved  in  labor  disputes,  is  indicated  plainly 
in  House  Report  No.  612,  Sixty-second  Congress,  where  Mr. 
Clayton,  for  the  Committee  on  Judiciary,  states : 

"The  necessity  for  legislation  concerning  them  arises 
out  of  the  divergent  views  which  the  courts  have  expressed 
on  the  subject  and  the  difference  between  courts  in  the  ap- 
plication of  recognized  views.  It  may  be  proper  to  notice, 
in  passing,  that  the  State  courts  furnish  precedents  fre- 
quently for  action  by  the  Federal  courts,  and  vice  versa,  so 
that  a  pernicious  rule  or  an  error  in  one  jurisdiction  is 
quickly  adopted  by  the  other.  It  is  not  contended  that 
either  the  Federal  or  the  State  courts  have  stood  alone  in 
any  of  the  precedents  which  are  disapproved." 

The  provisions  suggested  to  overcome  this  "pernicious  rule" 
(which  term  is  applied  to  the  doctrine  limiting  the  right  of  organ- 
ized labor  to  "refuse  to  deal"),  are  embodied  in  those  sections  of 
the  Clayton  Law  we  shall  later  consider  in  detail.  It  will  there 
appear  that  Congress  has  spoken  in  the  statute  as  plainly  as  the 
committee  has  recorded  its  mind  in  the  report. 

13  Martcll  v.  White,  185  Mass.  255,  260,  69  N.  E.  1085,  64  L.  R.  A.  260, 
102  Am.  St.  Rep.  341  (1904). 


LABOR.  177 


xx.  "BOYCOTT." 


Boycott  Defined  and  Considered. — Boycotts  are  in  their  na- 
ture a  species  of  sympathetic  strike.  Their  origin  can  be  traced 
in  McCarthy's  "England  Under  Gladstone,"  and  it  is  generally 
supposed  the  idea  had  its  inspiration  in  the  proceedings  of  excom- 
munication practiced  in  ecclesiastical  courts.  Judge  Taft  has  pre- 
sented a  definition  of  the  boycott  as  seen  in  actual  operation  in 
the  United  States : 

"As  usually  understood,  a  boycott  is  a  combination  of 
many  to  cause  a  loss  to  one  person  by  coercing  others' 
against  their  will  to  withdraw  from  him  their  beneficial 
business  intercourse  through  threats  that,  unless  those 
others  do  so,  the  many  will  cause  similar  loss  to  them."1* 

This  definition  perhaps  assumes  too  much,  since  the  use  of  the 
word  "coerce"  and  "threats"  indicate  a  measure  of  physical 
force  or  at  least  the  introduction  of  fear  of  such  active  aggres- 
sion. Acts  or  threats  of  that  character  of  course,  are  prohibited 
by  the  criminal  laws,  and  such  a  method  would  render  the  organ- 
ization and  the  members  participating  therein  subjects  for  fines 
and  penalties  of  various  kinds. 

But  where  moral  suasion  alone  is  resorted  to  and  the  business 
of  the  employer  or  even  of  third  parties  suffers  thereby  or  there- 
from, it  is  an  injury  that  is  incidental  to  the  right  to  refuse  to 
deal,  and  there  exists  no  means  for  obtaining  damages  or  other  re- 
dress, since  no  legally  recognized  injury  can  result  therefrom.  In 
brief,  it  is  an  instance  of  damnum  absque  injuria.  It  is  the  nat- 
ural outgrowth  or  incident  of  some  lawful  relation,  i.  e.,  that  of 
employer  and  employee,  and  under  such  circumstances  the  former 
test  of  malice  or  malicious  intent,  recognized  and  applied  in  some 
jurisdictions,  no  longer  controls. 

12.  PROTECTION  AFFORDED  BY  SECTIONS  6  AND  ao 
OF  CLAYTON  LAW. 

Toleration  and  Protection  Assured  by  Clayton  Law. — By 

an  affirmative  enactment  the  Clayton  Law,  Section  6,  specifically 
exempts  labor  organizations  from  any  construction  of  the  Anti- 
trust laws  that  will  forbid  their  existence  and  lawful  operation; 

14  Toledo,  etc.,  Ry.  Co.  v.  Penna.  Co.,  54  Fed.  730,  19  L.  R.  A.  387,  395. 

12 


178  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

and  it  is  therein  equally  forbidden  to  regard  them  as  illegal  com- 
binations or  conspiracies  in  restraint  of  trade,  under  those  laws. 
The  subject  of  the  revision  of  the  method  of  granting  and  apply- 
ing injunctive  relief  in  labor  disputes  is  treated  at  pages  119,  120, 
so  that  we  may  now  devote  our  attention  to  the  clauses  that  con- 
tain the  legislatively  promulgated  method  of  dealing  with  disputes 
between  employers  and  employees. 

13.  PROVISIONS  SEPARATELY  EXAMINED. 

Restrictive  Regulations  Applicable  to  Injunctive  Orders. — 

Section  20  prohibits  restraining  orders  or  injunctions  unless  nec- 
essary to  prevent  irreparable  injury  to  property,  or  to  a  property 
right,  of  the  party  making  the  application,  for  which  injury  there 
is  no  adequate  remedy  at  law.  In  addition,  the  property  or  prop- 
erty right  must  be  described  with  particularity  in  the  application, 
which  must  be  in  writing  and  sworn  to  by  the  applicant  or  his 
agent  or  attorney. 

With  these  introductory  special  requirements  complied  with, 
the  applicant  will  find  further  and  important  restrictions,  which 
are  in  reality  declarations  of  the  independence  of  organized  labor, 
so  far  as  regulation  of  their  lawful  acts  by  courts  or  court  pro- 
ceedings is  concerned.  The  effect  of  the  several  clauses  of  the 
second  paragraph  is  and  was  intended  to  be  so  comprehensive  as 
to  definitely  preclude  the  courts  from  rulings  unfriendly  and  ad- 
verse to  organized  labor  as  such;  indeed,  these  clauses  are  so 
fundamental  and  so  thoroughgoing  as  to  approach  the  dignity  of 
a  revolution  or  at  least  of  a  reform  in  the  legal  aspect  of  this  de- 
partment of  social  science.  It,  therefore,  is  not  only  useful  but 
necessary  to  devote  space  to  their  proper  and  orderly  considera- 
tion. 

First:   The  Right  to  Strike. 

Right  to  Strike  Recognized. — This  right  is  affirmed  in  the 
following  words : 

"And  no  such  restraining  order  or  injunction  shall  pro- 
hibit any  person  or  persons,  whether  singly  or  in  concert, 
from  terminating  any  relation  of  employment,  or  from 
ceasing  to  perform  any  work  or  labor,  or  from  recommend- 
ing, advising  or  persuading  others  by  peaceful  means  so 
to  do." 


LABOR.  179 

The  reasoning  which  prevailed  and  brought  about  this  provi- 
sion is  so  generally  covered  in  the  authorities  already  referred  to 
and  discussed  in  this  chapter  that  it  seems  unnecessary  to  treat  of 
those  matters  again  in  this  place.  It  must  suffice  to  say  that  while 
the  evils  which  are  or  may  be  incident  to  labor  agitation  and  man- 
agement oftentimes  bear  very  harshly  on  those  interested,  yet  in 
spite  of  those  evils  organized  labor  is  necessary  to  the  welfare  of 
the  community  as  it  exists  to-day. 

Second:  Peaceful  Picketing. 

Peaceful   Promoting  of  Strikers'  Interests  Permitted. — 

Paragraph  second  further  provides  that  such  organizations  or 
their  members  shall  not  be  restrained  or  enjoined  by  courts — 

"Or  from  attending  at  any  place  where  such  person  or 
persons  may  lawfully  be,  for  the  purpose  of  peacefully  ob- 
taining or  communicating  information,  or  from  peacefully 
persuading  any  person  to  work  or  to  abstain  from  work- 
ing." 

This  language  is  taken  from  the  British  trades  disputes  act,  the 
second  section  of  which  is  as  follows : 

"It  shall  be  lawful  for  one  or  more  persons  acting  on 
their  own  behalf  or  on  behalf  of  an  individual,  corporation 
or  firm  in  contemplation  or  furtherance  of  a  trade  dispute 
to  attend  at  or  near  a  house  or  place  where  a  person  re- 
sides or  works  or  carries  on  business  or  happens  to  be  if 
they  so  attend  merely  for  the  purpose  of  peacefully  obtain- 
ing or  communicating  information  or  of  peacefully  per- 
suading any  person  to  work  or  abstain  from  work." 

This  section  from  the  British  act,  it  has  been  said, — 

"might  well  be  termed  a  codification  of  the  law  relating  to 
peaceful  picketing  as  laid  down  by  a  majority  of  the  Amer- 
ican courts."15 

The  same  authority  affirms  that  while — 

"there  are  some  decisions  that  all  picketing  is  unlawful, 

*  *     *     yet  the  view  taken  by  the  majority  of  decisions 

*  *     *     is  best  supported  by  reason." 

15  Martin's  Modern  Law  of  Labor  Unions,  Sec.  173. 


180  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

Since  it  is  a  lawful  right  to  persuade  others,  the  incidental  right 
to  establish  pickets  to  meet  and  argue  with  other  workmen  and  to 
induce  them  to  aid  the  cause  of  the  strikers  cannot  well  be  gain- 
said. Peaceful  persuasion  is  obviously  a  feature  that  pertains 
to  citizenship ;  when  force  or  intimidating  threats  of  bodily  harm 
are  employed,  the  statutory  authorization  should  not  and  does 
not  apply. 

Unlawful  Acts  Subject  Offender  to  Contempt  Proceedings. 
— That  this  clause  of  Section  20,  paragraph  2,  is  not  intended  to 
encourage  acts  of  violence  is  evident  from  its  terms;  and  when 
such  conduct  exceeds  the  limits  of  "peacefully  persuading,"  the 
benefit  of  the  exemption  from  restraining  orders  or  injunctions 
is  forfeited.  Infractions  of  such  restraining  order  or  injunction 
when  issued  will  necessarily  come  within  the  scope  of  the  proceed- 
ings for  contempt  provided  by  Section  21,  since  acts  of  that  de- 
scription involve  violations  of  the  laws  which  everywhere  pro- 
hibit breaches  of  the  peace.  This  provision,  Section  21,  applies 
only  to  contempts  committed  urithout  the  presence  of  the  court, 
where  a  criminal  act  is  involved. 

While  this  method  of  compelling  obedience  is  very  frequently 
employed  by  courts,  Sections  21  to  25,  inclusive — governing  that 
method  of  judicial  coercion  for  acts  committed  without  the  pres- 
ence of  the  court— contain  no  express  provision  referring  to  labor. 
The  statute  applies  to  any  disobedience  to  "any  lawful  writ,  proc- 
ess, order,  rule,  decree  or  command"  by  any  Federal  court,  where 
the  act  complained  of  is  in  violation  of  any  of  the  criminal  laws 
of  the  United  States,  or  of  any  individual  State  in  which  the  act 
was  committed.  The  main  distinction  is  the  right  to  trial  by  jury, 
and  to  obtain  release  upon  bail  pending  appeal. 

These  features,  and  others  of  minor  importance,  are  referred 
to  and  commented  on  in  Chapter  X,  pages  120-2. 

Third:  Boycott  in  Aid  of  Cause  Legalized. 
Right  to  Withdraw  Patronage. — The  third  clause  is : 

"Or  from  ceasing  to  patronize  or  to  employ  any  party  to 
such  dispute,  or  from  recommending,  advising,  or  persuad- 
ing others  by  peaceful  and  lawful  means  so  to  do." 

The  court  opinions  on  this  matter  are  conflicting,  and  some 
attention  has  been  already  devoted  thereto,  at  pages  170-7,  supra. 
The  most  recent  text-book  on  the  subject  sums  up  the  sense  of 


LABOR.  i&i 

the  most  thoughtful  and  convincing  authorities  on  this  vexed 
topic,  as  follows : 

"A  combination  between  persons  merely  to  regulate 
their  own  conduct  and  affairs  is  allowable,  and  a  lawful 
combination  though  others  may  be  affected  thereby.  And 
the  fact  that  the  execution  of  the  agreement  may  tend  to 
diminish  the  profits  of  the  party  against  whom  such  act  is 
aimed  does  not  render  the  participants  liable  to  a  prosecu- 
tion for  a  criminal  conspiracy  or  to  a  suit  for  injunction. 
Even  though  he  sustain  financial  loss,  he  will  be  without 
remedy,  either  in  a  court  of  law  or  a  court  of  equity.  So 
long  as  the  primary  object  of  the  combination  is  to  advo- 
cate its  own  interests  and  not  to  inflict  harm  on  the  person 
against  whom  it  is  directed,  it  is  not  possible  to  see  how 
any  claim  of  illegality  could  be  sustained."18 

This  useful  "conclusion  of  the  whole  matter"  leaves  it  a  ques- 
tion of  fact  to  be  determined  from  the  proof  whether  the  "primary 
object  of  the  combination  is  to  advance  its  own  interests  and  not  to 
inflict  injury  on  the  person  against  whom  it  is  directed" ;  and  with 
this  inquiry  answered  in  the  affirmative  and  in  the  absence  of  vio- 
lence or  threat  thereof,  the  boycott  or  secondary  strike  (by  what- 
ever name  it  may  be  termed),  becomes  a  weapon  which  may  be 
lawfully  employed. 

Labor  Organizations  May  Assert  Every  Right. — As  has  been 
stated  above,  the  best  authorities  give  their  support  to  this  atti- 
tude toward  the  efforts  of  organized  labor,  whether  acting  upon 
the  defensive  or  when  asserting  its  power  to  advance  its  own  in- 
terests. Mr.  Justice  Van  Orsdel  in  his  concurring  opinion  in  the 
Court  of  Appeals  of  the  District  of  Columbia  says : 

"Applying  the  same  principle,  I  conceive  it  to  be  the 
privilege  of  one  man,  or  a  number  of  men,  to  individually 
conclude  not  to  patronize  a  certain  person  or  corporation. 
It  is  also  the  right  of  these  men  to  agree  together,  and  to 
advise  others,  not  to  extend  such  patronage.  That  advice 
may  be  given  by  direct  communication  or  through  the 
medium  of  the  press,  so  long  as  it  is  neither  in  the  nature 
of  coercion  or  a  threat. 

16  Martin's  Modern  Law  of  Labor  Unions,  see  pages  109  and  no. 


1 82  MANUAL  of  FEDERAL  TRADE  COMMISSION. 

"As  long  as  the  actions  of  this  combination  of  individuals 
are  lawful  to  this  point  it  is  not  clear  how  they  can  become 
unlawful  because  of  their  subsequent  acts  directed  against 
the  same  person  or  corporation."17 

In  Massachusetts,  where  the  tide  of  judicial  rulings  flowed  most 
strongly  in  the  opposite  direction,  a  counter  current  is  disclosed  in 
the  following  expression  of  Mr.  Justice  Holmes,  now  of  the  Su- 
preme Court  of  the  United  States : 

"It  is  plain  from  the  slightest  consideration  of  practical 
affairs,  or  the  most  superficial  reading  of  industrial  history, 
that  free  competition  means  combination,  and  that  the  or- 
ganization of  the  world,  now  going  on  so  fast,  means  an 
ever-increasing  might  and  scope  of  combination.  It  seems 
to  me  futile  to  set  our  faces  against  this  tendency.  *  *  * 
If  it  be  true  that  workingmen  may  combine  with  a  view, 
among  other  things,  to  getting  as  much  as  they  can  for 
their  labor,  just  as  capital  may  combine  with  a  view  to  get- 
ting the  greatest  possible  return,  it  must  be  true  that  when 
combined  they  have  the  same  liberty  that  combined  capital 
has,  to  support  their  interest  by  argument,  persuasion,  and 
the  bestowal  or  refusal  of  those  advantages  which  they 
otherwise  lawfully  control."18 

Congress  Overrules  Restrictive  Decisions. — To  whatever  de- 
gree Lawler  v.  Loewe  (the  Danbury  Hat  case),  235  U.  S.  522, 
has  altered  or  expressly  opposed  this  view,  it  is  itself  overruled 
by  Congress,  which,  if  within  the  limits  of  the  Constitution,  is  the 
supreme  authority,  empowered  to  fix  and  establish  the  principles, 
policy  and  measures  which  together  constitute  the  law  of  the  na- 
tion. 

Fourth:  Labor  Organizations  May  Grant  Financial  Aid. 

Strike  Benefit  Fund  is  Private  Property.— The  fourth 
clause  is  as  follows : 

"Or  from  paying  or  giving  to,  or  withholding  from,  any 

17  American  Federation  of  Labor  et  al.  v.  Buck's  Stove  &  Range  Co., 
Cir.  Ct.  of  App.,  Dist.  of  Columbia,  No.  1916  (decided  March  II,  loop). 

18  Vegelahn  v.  Gunter,  167  Mass.  92,  44  N.  E.  1077,  35  L.  R.  A.  722 ;  57 
Am.  St.  Rep,  443  (1896). 


LABOR.  183 

person  engaged  in  such  dispute,  any  strike  benefits  or  other 
moneys  or  things  of  value." 

Two  leading  cases  in  State  courts10  have  held  that  if  the  strike 
is  intended  to  accomplish  an  unlawful  purpose,  strike  benefits  in 
aid  thereof  will  be  enjoined.  But  in  the  only  case  of  this  descrip- 
tion disposed  of  in  a  Federal  court,  the  opposite  conclusion  was 
reached,  and  the  reason  assigned  was — 

"the  strike  benefit  fund  is  created  by  moneys  deposited  by 
the  men  with  the  general  officers  for  the  support  of  them- 
selves and  families  in  times  of  strike,  and  the  court  has  no 
more  control  of  it  than  it  would  have  over  deposits  made 
by  them  in  the  banks."20 

Two  leading  cases  recently  decided  in  the  English  courts,  bear 
out  the  correctness  of  this  view.21 

Fifth:  Right  to  Peaceably  Assemble  Established. 

Existence  of  Dispute  does  not  Illegalize  Otherwise  Lawful 
Act. — The  fifth  and  sixth  clauses  of  this  paragraph — and  the  final 
expression  as  to  specified  particular  rights — are  contained  in  the 
following  words : 

"Or  from  peaceably  assembling  in  a  lawful  manner,  and 
for  lawful  purposes ;  or  from  doing  any  act  or  thing  which 
might  lawfully  be  done  in  the  absence  of  such  dispute  by 
any  party  thereto." 

The  conduct  described  in  these  sections  is  so  obviously  proper 
and  is  so  far  removed  from  any  just  ground  of  attack  that  it 
would  appear  a  useless  expenditure  of  attention — a  work  of 
supererogation — to  attempt  to  give  reasons  or  enter  upon  any 
argument  in  support  thereof. 

The  doctrine  is  generally  stated  as  a  legal  proposition  in  the 
able  decision  by  Judge  Noyes  in  a  leading  case : 

"A  laborer,  as  well  as  a  builder,  trader,  or  manufacturer, 
has  the  right  to  conduct  his  affairs  in  any  lawful  manner, 

19  Reynolds  v.  Davis,  198  Mass.  294,  84  N.  E.  457,  17  L.  R.  A.  N.  S. 
162  (1908) ;  A.  S.  Barnes  &  Co.  v.  Chicago  Typographical  Union,  232  111. 
402,  83  N.  E.  932,  14  L.  R.  A.  N.  S.  1150,  122  Am.  St.  Rep.  129  (1908). 

20  A.  S.  Barnes  v.  Berry,  157  Fed.  R.  883. 

21  Densbey,  etc.,  Collieries  v.  Yorkshire  Miners'  Assoc'n,  75  L.  J.  K.  B. 
284;  Lyons  v.  Wilkins,  67  L.  J.  ch.  383. 


184  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

even  though  he  may  thereby  injure  others.  *  *  *  The 
damage  is  present,  but  the  unlawful  object  is  absent.  And 
so  the  essential  question  must  always  be,  whether  the  ob- 
ject of  a  combination  is  to  harm  others  or  to  exercise  the 
rights  of  the  parties  for  their  own  benefit."22 

These  clauses,  5  and  6,  constitute  a  corollary  of  the  preceding 
provisions  of  this  paragraph.  The  reasoning  is  the  same,  only 
less  radical  than  is  required  to  support  the  second  clause,  which 
governs  picketing. 

14.  RIGHTS  OF  LABOR  CONFIRMED. 

General  Policy  Declared. — The  concluding  words  of  this  im- 
portant paragraph  are : 

"Nor  shall  any  of  the  acts  specified  in  this  paragraph  be 
considered  or  held  to  be  violations  of  any  law  of  the  United 
States." 

This  omnibus  provision  is  declaratory  of  an  attitude  by  Con- 
gress with  regard  to  organized  labor,  which  makes  it  mandatory 
upon  the  Federal  courts  to  recognize  their  rights  as  declared  in 
this  law.  It  is  an  evolution  from  long  and  varied  discussions  be- 
fore legislative  councils  and  in  courts. 

22  National  Fire  Proofing  Co.  v.  Mason  Builders'  Assoc'n,  169  Fed. 
260,  265. 


CHAPTER  XV. 

ANTI-TRUST  LAWS  IN  THEIR  RELATION  TO  PAT- 
ENTS AND  COPYRIGHTS. 

1.  Origin  and  Purpose  of  Exclusive  Grants. 

2.  Scope  of  Exclusive  Powers  under  Patent  Laws. 

3.  Copyright  Laws  as  Construed  under  Anti-Trust  Statutes. 

4.  Protection  of  Public  is  End  Sought  by  Anti-Trust  Laws. 

x.  ORIGIN  AND  PURPOSE  OF  EXCLUSIVE  GRANTS. 

Power  is  Conferred  by  Constitution. — The  narrative  of  the 
origin  and  early  history  of  the  power  whereby  Congress  confers 
exclusive  rights  upon  authors  and  inventors  can  be  compressed 
within  the  space  of  annals  at  once  both  short  and  simple.  Article  I 
of  the  Constitution  contains  the  basic  grant : 

"Section  8.  The  Congress  shall  have  power  *  *  * 
To  promote  the  Progress  of  Science  and  useful  Arts,  by 
securing  for  limited  Times  to  Authors  and  Inventors  the 
exclusive  Right  to  their  respective  Writings  and  Discov- 
eries." 

Early  Action  by  Congress. — This  power  was  exercised  by  Con- 
gress among  the  first  after  the  organization  of  our  government. 
The  subject  was  taken  up  at  the  second  session  of  the  First  Con- 
gress, and  a  law  was  enacted  authorizing  a  patent  to  be  issued  to 
the  inventor  of  any  useful  art,  etc.,  upon  his  petition — 

"granting  to  such  petitioner,  his  heirs,  administrators  or 
assigns,  for  any  term  not  exceeding  fourteen  years,  the  sole 
and  exclusive  right  and  liberty  of  making,  using  and  vend- 
ing to  others  to  be  used,  the  said  invention  or  discovery." 

Such  patent,  the  statute  further  declares,  "shall  be  good  and 
available  to  the  grantee  or  grantees  by  force  of  this  act,  to  all  and 
every  intent  and  purpose  herein  contained."  The  amendatory 
act  of  1793  contains  the  same  language;  and  the  whole  indicates 
the  legislative  intent  to  carry  out  the  power  to  that  end  conferred 
upon  Congress  under  the  Constitution. 

185 


1 86  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

The  exclusive  powers  under  copyright  are  contained  in  Re- 
vised Statutes,  Section  4952 ;  see  also,  2  Federal  Statutes  Anno- 
tated, pages  255  et  seq.  Under  the  common  law,  authors  always 
retained  the  right  to  control  or  restrain  the  publication  of  their 
works  by  others;  but  if  they  exercised  the  right  of  publication 
themselves,  they  dedicated  their  work  and  had  no  further  control 
in  the  matter.  Thus  the  constitutional  and  legislative  grant  is  in 
effect  an  extension  of  the  ancient  common  law  right,  and  this  is 
performed  by  removal  of  the  former  rule  of  law  that  publication 
means  dedication.  Thenceforth,  upon  complying  with  certain  pre- 
scribed regulations  as  to  filing,  etc.,  the  author  is  empowered  to 
issue  his  literary  productions  by  the  thousand  instead  of  handing 
about  his  original  work,  which  was  the  extent  to  which  his  rights 
could  be  exercised  with  safety  to  his  power  of  ownership  or  con- 
trol, under  the  common  law. 

Relative  Extent  of  these  Exclusive  Rights. — Patents  are 
granted  for  inventions  or  discoveries  in  mechanisms,  processes  and 
compositions  of  matter  which  contribute  to  the  progress  of  the 
"useful"  arts  and  sciences.  Such  inventions  or  discoveries  fre- 
quently involve  broadly  new  principles  and  work  revolutions  in  en- 
tire lines  of  industrial  and  scientific  endeavor.  Inventors  are  there- 
fore, entitled  to  grants  of  a  scope  commensurate  with  the  scope  of 
their  inventions,  determined,) however,  by  the  language  of  the  patent 
claim.  In  the  cases  of  patents  for  such  broadly  new  and  useful 
inventions  the  courts  are  disposed  to  give  as  broad  and  liberal  a 
construction  to  the  grant  as  possible  under  the  language  used  and 
give  the  inventor  the  benefit  of  what  he  has  discovered.  This 
line  of  judicial  reasoning  proceeds  upon  the  theory  that  the  object 
and  purpose  of  the  patent  laws  are  to  induce  the  inventor  to  dis- 
close for  the  ultimate  public  benefit  a  discovery  which  he  might 
otherwise  utilize  for  his  sole  advantage  and  enrichment  by  prac- 
ticing it  in  secret ;  hence,  it  is  to  the  public  interest  that  a  monop- 
oly for  seventeen  years  shall  be  conferred  in  return  for  a  full 
disclosure  of  his  invention  so  that  the  public  may  have  the  benefit 
of  its  free  enjoyment  when  the  term  of  grant  expires. 

So,  too,  in  the  case  of  copyright,  the  statute  contemplates  that 
authors  shall  be  encouraged  in  their  work  by  the  grant  of  ex- 
clusive rights  to  publish  and  sell  the  fruits  of  their  labors  for 
limited  periods.  These  periods  are  much  more  liberal  than  in  the 
case  of  patents,  however,  for  the  original  copyright  runs  for 


PATENTS  AND  COPYRIGHTS.  187 

twenty-eight  years  and  may  be  renewed  for  another  twenty-eight 
years,  giving  the  author  fifty-six  years  of  exclusive  enjoyment  of 
his  work,  whereas  all  patented  inventions  must  pass  into  the 
public  domain  at  the  end  of  seventeen  years  and  can  never  there- 
after be  sequestrated  from  public  enjoyment.  But  while  the 
copyright  law  is  based  on  the  same  beneficent  purpose  of  pro- 
moting the  public  welfare,  in  this  case  by  encouraging  advance- 
ment in  literary,  musical  and  artistic  achievement,  yet  the  scope 
of  the  work  of  the  author  or  the  composer,  or  the  artist  must  of 
necessity  be  limited  to  the  very  work  he  produces.  It  is,  there- 
fore, apparent  that  the  grant  must  be  different  in  character  and  in 
scope  from  a  patent  grant.  The  copyright  prohibits  copying,  it 
vests  in  the  author  the  exclusive  right  to  reproduce,  to  publish  his 
work.  The  scope  of  the  patent  is  determined,  as  before  explained, 
by  the  scope  of  the  language  used  in  the  patent  claim  to  define  the 
invention,  and  should  be  co-extensive  with  the  scope  of  the  in- 
vention. In  the  case  of  patents  the  courts  are  disposed  to  con- 
strue the  patents  as  nearly  as  possible  under  the  conditions  of 
the  case  to  afford  the  inventor  or  patent  owner  that  measure  of 
protection  to  which  he  is  entitled,  and  in  the  case  of  copyrights 
they  are  most  vigorous  in  the  enforcement  of  the  exclusive  rights 
of  the  author  to  the  reproduction  of  his  copyrighted  work. 

2.  SCOPE  OF  EXCLUSIVE  RIGHTS  UNDER  PATENT 
LAWS. 

Restrictions  on  Future  Inventions. — Where  it  was  sought  to 
require  an  employee  to  sign  away  his  right  to  make  any  useful 
invention  by  way  of  improvements  connected  with  the  subject  of 
his  employment,  the  Massachusetts  Supreme  Court  held  that  the 
inclusion  of  a  term  reaching  ten  years  beyond  termination  of  the 
contract  of  employment  was  in  aid  of  monopoly  of  interstate 
trade  and  commerce.  The  contract  was  declared  void  under  the 
Sherman  Law.1 

Decision  Defines  Scope  of  Patentee's  Rights. — In  a  rela- 
tively recent  decision  by  the  Supreme  Court  it  was  held  that  a 
patentee  without  exceeding  his  exclusive  right  to  "make,  use  and 
vend,"  could  stipulate  that  certain  unpatented  articles  should  be 
employed  in  a  specified  manner  in  connection  with  his  patented 

i  United  Shoe  Machinery  Co.  v.  La  Chapelle,  212  Mass.  67,  99  N.  E. 
289,  cited  in  Thornton,  "Sherman  Anti-trust  Act,"  page  652. 


i88  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

machine,  and  that  violation  of  that  covenant  should  constitute  a 
contributory  infringement.2 

Conditional  or  "Tying"  Contracts. — The  wide  publicity 
given  to  a  very  forcefully  expressed  dissenting  opinion  by  the 
chief  justice  attracted  unusual  attention  to  this  decision,  although 
it  announced  no  new  doctrine  and  went  no  further  than  to  re- 
affirm what  has  been  the  settled  law  relating  to  these  questions 
from  the  foundation  of  the  patent  system.  The  views  expressed 
in  the  dissenting  opinion,  both  because  of  the  eminent  authority 
that  uttered  them  and  because  of  the  somewhat  radical  form  of 
the  dissent,  attracted  wide  attention  to  the  case  and  resulted  in 
great  divergence  of  opinion  as  to  the  correctness  of  the  interpre- 
tation of  the  law,  or  the  fairness  of  the  law  to  the  public  if  its  inter- 
pretation by  the  majority  of  the  court  is  correct.  The  element  partial 
to  the  views  expressed  in  the  dissenting  opinion  found  a  consid- 
erable representation  in  Congress,  with  the  result  that  this  de- 
cision of  the  court  played  a  considerable  part  in  the  framing  and 
discussion  of  the  Clayton  Law,  particularly  that  portion  which 
resulted  in  Section  3  of  the  bill  as  enacted.  Certain  members  of 
the  judiciary  committees  advocated  radical  provisions  prohibiting 
all  "tying"  clauses  in  contracts  relating  to  patented  inventions,  and 
a  number  of  different  forms  of  provisions  were  presented  to  the 
committees,  both  of  the  House  and  the  Senate,  for  consideration 
and  much  of  the  discussion  and  interest  in  this  bill  centered 
around  the  provisions  of  this  section.  The  advocates  of  a  radical 
prohibitory  provision  believed  that  the  decision  of  the  Supreme 
Court  in  Henry  v.  Dick  to  be  an  unjustifiable  enlargement  of 
rights  under  a  patent  grant, i.  e.,  the  inclusion  therein  of  elements 
of  control  not  contemplated  in  the  patent  laws  and  outside  the 
scope  of  the  grant  as  stated  in  the  words  of  the  grant  itself.  The 
consideration  of  this  subject  eventually  resulted  in  Section  3  of 
the  Clayton  Act,  which  contains  a  provision  prohibiting  condi- 
tional or  "tying"  contracts,  leases,  and  sales  affecting  articles 
"whether  patented  or  unpatented,  *  *  *  where  the  effect 
may  be  to  substantially  lessen  competition  or  tend  to  create  a 
monopoly  in  any  line  of  commerce." 

This  is  the  only  direct  reference  to  patents  contained  in 
the  Anti-trust  laws ;  but  it  was  no  doubt  intended  at  once  to  dis- 

2  Henry  v.  A.  B.  Dick  Co.,  224  U.  S.  i,  32  Sup.  Ct.  364,  56  L.  Ed.  645  ; 
see  149  Fed.  424. 


PATENTS  AND  COPYRIGHTS.  189 

play  and  exercise  the  powers  which  Congress  retains  over  limited 
as  well  as  other  classes  of  monopolies,  for  it  is  provided  that  this 
prohibition  of  "tying"  contracts,  etc.,  extends  not  only  to  the  sev- 
eral States  and  Territories,  but  to  "any  insular  possession  or 
other  place  under  the  jurisdiction  of  the  United  States." 

Owner  of  Patent  Entitled  to  Select  his  Source  of  Profit. — 
The  doctrine  as  last  announced  in  Henry  v.  Dick  has  been  re- 
ferred to  as  constituting  the  occasion  for  the  provision — Clayton 
Law,  Section  3 — of  the  supplementary  Anti-trust  legislation  in- 
tended to  prevent  an  over-extension  of  the  patentee's  rights 
through  "tying"  agreements,  leases  or  sales. 

The  prohibition,  however,  does  not  appear  to  be  vital;  and 
this  new  legislation  would  seem  only  to  make  clear  the  limita- 
tions of  the  doctrine  and  surround  it  with  "Thou  shalt  not" 
declarations  to  prevent  its  extension  beyond  a  fair  recognition  of 
the  rights  under  a  patent  grant,  recognition  both  fair  to  the  owner 
of  the  patent  and  consistent  with  the  rights  of  the  public.  If  the 
owner  of  the  patent  chooses  to  require  that  the  consideration 
for  the  use  of  the  patented  invention  shall  take  the  form  of  profits 
derived  from  the  sale  of  material  used  in  the  course  of  the  em- 
ployment of  the  invention  and  to  require,  by  contract  with  the 
user,  that  he  shall  purchase  from  him  such  material  for  such  use, 
such  an  election  seems  justified  from  every  point  of  view  and 
within  his  legal  rights.  Such  a  contract  can  hardly  be  termed 
a  contract  to  "substantially  lessen  competition  or  tend  to  create 
a  monopoly  in  any  line  of  commerce,"  for  it  would  only  affect 
the  use  of  the  patented  invention,  which  the  owner  of  the  patent, 
under  the  specific  terms  of  the  patent  grant  is  given  the  exclusive 
right  to  control  during  the  life  of  the  patent.  It  would  not  create 
a  monopoly  in  the  material,  for  the  material  would  be  free  to  the 
use  of  everyone  for  all  purposes  except  to  use  on  the  patented  in- 
vention in  question,  and  the  user  of  the  patented  invention  would 
be  free  to  use  any  material  to  his  advantage  for  any  other  pur- 
pose than  with  the  patented  invention.  It  is  only  where  the  owner 
of  a  patent  may  undertake  by  a  contract  to  require  the  person 
using  his  patented  invention  to  purchase  material  for  general 
use,  outside  the  scope  of  the  patented  invention,  and  without  re- 
gard to  its  direct  connection  with  the  utilization  of  the  invention, 
that  a  violation  of  the  provisions  of  the  anti-trust  laws  and,  in  par- 
ticular, the  limitations  upon  conditional  agreements,  etc.,  con- 
tained in  Section  3  of  the  Clayton  Law,  would  result.  Thus  it 


190  MANUAL  of  FEDERAL  TRADE  COMMISSION. 

would  seem  that  after  due  consideration  the  Congress  has  sub- 
stantially recognized  the  soundness  of  the  doctrine  of  the  decision 
of  the  court  in  Henry  v.  Dick,  but  sought  to  profit  by  the  pro- 
phetic warning  in  the  dissenting  opinion  and  encompassed  the 
doctrine  with  statutory  limitations,  lest  it  might  be  extended  to 
an  infringement  of  inherent  public  rights. 

No  doubt  instances  occur  where  the  success  of  the  patented  ma- 
chine or  process  depends  upon  the  quality  of  the  material  used ; 
and  in' such  cases  an  additional  reason  exists  for  permitting  the 
patentee  to  require  such  quality  to  be  maintained  and  to  supply  the 
demand  which  his  inventive  skill  creates. 

Violation  of  Sherman  Law  not  a  Defence  to  Infringement 
Suit. — Important  decisions  have  held  that  violations  of  the 
Sherman  Law  do  not  constitute  matters  for  defence  in  actions 
for  infringement.  The  ruling  is  in  some  degree  akin  to  the  doc- 
trine that  a  tenant  cannot  dispute  the  title  of  his  landlord.  If 
there  is  an  illegal  monopoly  or  an  unlawful  restraint  of  trade,  it 
must  be  taken  up  and  disposed  of  as  a  separate  question.  In  ef- 
fect, these  decisions  leave  the  enforcement  of  the  Anti-trust  stat- 
ute to  an  injunction  suit  at  the  instance  of  the  United  States  gov- 
ernment.3 

The  court  says : 

"Such  a  combination  may  be  an  odious  and  wicked  one, 
but  the  proposition  that  the  plaintiff,  while  infringing  the 
rights  vested  in  the  defendant  under  letters  patent  of  the 
United  States,  is  entitled  to  stop  the  defendant  from  bring- 
ing or  prosecuting  any  suit  therefor  because  the  defendant 
is  an  obnoxious  corporation,  and  is  seeking  to  perpetuate 
the  monopoly  which  is  conferred  upon  it  by  its  title  to  the 
letters  patent  is  a  novel  one,  and  entirely  unwarranted. 
*  *  *  it  is  immaterial  whether  his  [defendant's]  mo- 
tives are  good  or  bad,  and  he  is  not  required  to  give  his 
reasons  for  the  attempt  to  assert  his  legal  rights."* 
Under  Section  16  of  the  Clayton  Law,  individuals  are  now 
empowered  to  bring  suits  that  formerly  could  be  brought  only  by 

3  Otis  Elevator  Co.  v.  Geiger,   107  Fed.   131;    National  Folding-Box 
Paper  Co.  v.  Robertson,  99  Fed.  985;    Columbian  Wire  Co.  v.  Freeman 
Wire  Co.,  71  Fed.  306;  Thornton,  "Sherman  Anti-trust  Act,"  Section  453. 

4  Strait  v.  National  Harrow  Co.,  51  Fed.  819.    See  also  Continental  Wall 
Paper  Co.  v.  Voight,  212  U.  S.  227;  D.  R.  Wilder  Mfg.  Co.  v.  Corn  Prod- 
ucts Co.,  236  U.  S.  165 ;  also,  text  and  authorities  at  page  198,  post. 


PATENTS  AND  COPYRIGHTS.  191 

the  government  under  Section  4  of  the  Sherman  Law;  but  no 
inherent  reason  appears  why  the  doctrine  enunciated  above  should 
not  continue  in  effect  and  the  interposing  of  Anti-trust  defenses 
be  barred  in  actions  to  enforce  the  exclusive  rights  which  the 
patent  laws  confer. 

Enlarging  Patent  Rights  by  Combinations. — It  is  apparent 
that  when  a  number  of  patentees  pool  their  respective  owner- 
ships, and  proceed  as  a  unit,  it  is  quite  possible  to  piece  together 
an  enlarged  right — an  artificial  monopoly — such  as  was  never  con- 
templated under  the  patent  laws.  Of  such  a  combination  the  Su- 
preme Court  says : 

"The  agreements  clearly,  therefore,  transcend  what  was 
necessary  to  protect  the  use  of  the  patent  or  the  monopoly 
which  the  law  conferred  upon  it.  They  passed  to  the  pur- 
pose and  accomplished  a  restraint  of  trade  condemned  by 
the  Sherman  law.5 

A  similar  ruling  by  the  Federal  courts  is  found  in  a  case  where 
patentees  based  their  combination  on  the  common  and  natural 
wish  to  avoid  infringement  suits.  In  dealing  with  this  contention 
(which  the  court  held  to  be  a  mere  cloak),  it  was  said: 

"The  fact  that  the  property  involved  is  covered  by  let- 
ters patent  is  urged  as  a  justification;  but  we  do  not  see 
how  any  importance  can  be  attributed  to  this  fact.  Patents 
confer  a  monopoly  as  respects  the  property  covered  by 
them,  but  they  confer  no  right  upon  the  owners  of  several 
distinct  patents  to  combine  for  the  purpose  of  restraining- 
competition  and  trade.  Patented  property  does  not  differ 
in  this  respect  from  any  other.6 

These  decisions  indicate  the  high-water  mark  which  was 
reached  under  the  Sherman  Law,  and  supply  a  useful  standard  in 
their  clear  intention  to  enforce  it  in  spirit  as  well  as  in  form. 

Agreeing  to  Suppress  Invention. — Where  the  inventor  has  en- 
tered into  a  contract  not  to  use  his  invention,  such  agreement  has 
been  held  to  be  against  public  policy  and  in  restraint  of  trade.  The 
following  brief  extract  contains  the  salient  points  of  the  leading 
decision  which  establishes  this  doctrine : 

"It  [patentee's  right]  is  an  assignable  and  heritable  ex- 

5  Standard  Sanitary  Mfg.  Co.  v.  U.  S.,  226  U.  S.  20,  33  Sup.  Ct.  9,  57  L. 
Ed.  107;  affirming  191  Fed.  172. 

6  National  Harrow  Co.  v.  Hench,  76  Fed.  667,  affirmed  83  Fed.  36,  27  C. 
C.  A.  349. 


192  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

elusive  right  to  make,  use  and  vend.  *  *  *  A  patentee 
who  agrees  to  suppress  his  [invention]  is  not  promoting  it. 
He  is  not  deriving  his  profit  from  its  promotion,  but  from 
the  manipulation  of  the  market.  It  is  no  part  of  the  con- 
stitutional scheme,  or  of  the  scheme  of  the  patent  laws, 
to  secure  to  inventors  a  profit  from  the  suppression  of 
their  creations.  *  *  *  The  reasons  for  enacting  the 
Sherman  Law  seem  quite  as  applicable  to  articles  of  this 
character  as  to  articles  having  no  connection  with 
patents."7 

Requiring  Vendee  to  Maintain  Retail  Price  of  Patented  Arti- 
cle.— After  some  variation  in  judicial  holdings  as  to  the  right  of 
the  patentee  to  fix  the  continuing  re-sale  price  of  patented  goods, 
such  practices  were  declared  illegal  in  Bauer  &  Cie  v.  O'Donnell. 
This  case8  holds  to  the  effect  that  where  the  owner  of  the  patent 
has  sold  the  product,  he  cannot  control  the  re-sale  price  further 
than  as  to  his  immediate  vendee,  i.  e.,  the  price  more  than  once  re- 
moved or  after  the  goods  pass  into  the  channels  of  trade. 

"The  right  to  vend  conferred  by  the  patent  law  has  been 
exercised,  and  the  added  restriction  is  beyond  the  protec- 
tion and  purpose  of  the  act." 

Accordingly,  a  notice  that  a  sale  of  the  patented  thing  by  a  party 
not  under  contract  with  the  patent  owner  at  less  than  the  fixed 
price  shall  constitute  an  infringement  of  the  patent  is  brutum  ful- 
men,  and  need  excite  no  apprehension.  The  question  seems 
settled  in  accordance  with  the  dictates  of  reason  and  sound  prin- 
ciples of  law. 

Prohibition  Extends  to  Copyrighted  and  Unpatented  Wares. 
— In  another  recent  case  the  same  rule  as  to  re-sales  has  been  ap- 
plied to  unpatented  articles,  and  the  cases  have  been  construed 
together  in  an  official  publication : 

"These  last  three  cases  (Bobbs-Merrill  Co.  v.  Strauss, 
210  U.  S.  339;  Dr.  Miles  Medical  Co.  v.  Park  &  Sons  Co., 
220  U.  S.  373,  and  Bauer  v.  O'Donnell,  229  U.  S.  i)  form 
a  distinct  trinity  and  express  the  views  of  the  Supreme 
Court  of  the  United  States  under  existing  law  on  the  sub- 
ject or  re-sale  and  price-fixing  and  price-maintenance  con- 

7  Blount  Mfg.  Co.  v.  Yale  &  Towne,  166  Fed.  555. 

8  229  U.  S.  i,  33  Sup.  Ct.  616,  57  Law  Ed.  1041. 


PATENTS  AND  COPYRIGHTS.  193 

tracts.  The  Bobbs-Merrill  case  relates  to  copyrighted 
articles,  while  the  Dr.  Miles  case  relates  to  unpatented 
articles  entering  into  interstate  commerce,  and  the  O'Don- 
nell  case  applies  to  patented  articles.  These  cases  cover 
the  whole  subject  of  price-fixing  contracts."9 

Clayton  Act  Applied. — In  a  recent  decision  by  a  federal 
court,10  a  restraining  order  was  refused  where  the  defendant  de- 
clined to  sell  its  product  direct  to  a  customer,  who,  because  of  the 
magnitude  of  its  business,  through  the  medium  of  an  extensive 
chain  of  stores,  had  been  accustomed  to  purchase  in  car-lots  and 
take  advantage  of  special  car-lot  prices  and,  in  retailing,  had  cut 
prices  below  the  price  at  which  small  retailers  were  accustomed 
to  sell  and  were  obliged  to  sell  in  order  to  make  a  profit  on  the 
product.  The  decision  is  based  upon  the  rights  of  defendant  to 
control  its  trade  name  "Cream  of  Wheat"  as  well  as  upon  the 
inherent  right  to  select  customers  or  refuse  to  deal.  The  decision 
is  justified  in  recognizing  the  right  to  refuse  to  deal  by  reference 
to  various  court  decisions,11  and  by  the  court's  interpretation  of 
the  language  of  Section  2  of  the  Clayton  Act,  providing  that 
"nothing  herein  contained  shall  prevent  persons  engaged  in  selling 
goods,  wares,  or  merchandise  in  commerce  from  selecting  their 
own  customers  in  bona  fide  transactions  and  not  in  restrain  of 
trade." 

Decision  Recognizes  Right  of  Dealer  to  Protect  Trade. — 
This  decision  recognizes  the  right  of  a  manufacturer  to  refuse  to 
place  in  the  hands  of  one  large  customer  the  means  of  destroying 
the  business  and  trade  of  a  multitude  of  other  customers,  thus 
recognizing  the  right  of  every  man  to  carry  on  his  own  business 

9  "Laws  on  Trusts  and  Monopolies  with  Authorities,"  compiled  by  Na- 
than B.  Williams  in  connection  with  the  enquiry  conducted  by  the  House 
Committee  on  Judiciary, — at  page  36.    This  work  contains  in  compact  and 
convenient  form  a  valuable  collection  of  Anti-trust  laws,  domestic  and 
foreign. 

10  Great  Atlantic  &  Pacific  Tea  Co.  v.  Cream  of  Wheat  Co.,  224  Fed. 
566.    See  note  containing  matter  pertaining  to  this  decision,  page  28,  supra. 

11  This  right  is  referred  to  in  connection  with  labor  disputes, — Chapter 
XIV,  pages  164-184,  supra. 

The  following  decisions  recognize  the  inherent  right  of  refusing  busi- 
ness, but  bear  no  relation  to  the  facts  herein :  In  re  Grice,  79  Fed.  Rep.  627 ; 
Greater  New  York,  Etc.,  Co.  v.  Biograph  Co.,  203  Fed.  Rep.  39;  Adair  v. 
United  States,  208  U.  S.  161 ;  Standard  Oil  Co.  v.  U.  S.,  221  U.  S.  at  p.  56. 
13 


194  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

by  such  methods  as,  in  his  own  judgment,  will  be  to  the  best  ad- 
vantage of  the  business,  so  long  as  he  does  not  adopt  methods  pro- 
hibited by  law  or  contrary  to  public  policy.  The  court  adopts  the 
reasoning  advanced  by  the  Supreme  Court  of  the  State  of  Wash- 
ington in  a  recent  decision.12 

"Price-Discrimination"  Section  Construed. — Section  2  of 
the  Clayton  Law  forbids  price  discrimination,  with  the  exception 
among  others  that  persons  are  not  prevented  thereby  "from  se- 
lecting their  own  customers  in  bona  fide  transactions,  and  not  in 
restraint  of  trade."  It  was  this  provision  of  the  Clayton  Law 
which  came  up  for  construction.12* 

Combinations  by  Patentees  Subject  to  Anti-trust  Laws. — 
Authorities  cited  and  before  quoted  show  clearly  that  while  a 
patentee  may  receive  a  grant  of  a  limited  exclusive  enjoyment  in 
return  for  the  disclosure  of  his  invention,  he  must  conduct  his 
business  thereunder  in  conformity  to  law.  Combinations  of  inde- 
pendent patents  by  their  owners, — 

"whereby  as  part  of  a  plan  to  monopolize  the  commercial 
field,  competition  is  eliminated,  are  within  the  Sherman 
Law,  for  the  reason  that  the  restraint  of  trade  or  monopoly 
arises  from  combination,  and  not  from  the  exercise  of 
rights  granted  by  letters  patent."13 

In  consequence  of  this  ruling,  agreements  between  owners  of 
distinct  patents  limiting  and  restraining  the  interstate  trade  of 
each,  were  declared  void  under  the  Sherman  Anti-trust  Act. 

As  has  been  mentioned  already  (page  191,  supra),  combinations 
by  owners  of  patents  may  in  effect  result  in  an  enlargement  of 
patent-rights  beyond  anything  contemplated  by  law,  and  thereby 
accomplish  ends  that  would  fail  if  attempted  through  the  ordinary 
channel  of  a  petition  for  original  patent-rights.  In  brief,  it  may 

12  Fisher  Flour  Mills  Co.  v.  Swanson,  76  Wash.  649. 

i2a  It  may  be  contended,  however,  in  opposition  to  this  judicial  con- 
struction and  application  of  Section  2,  that  the  Clayton  Law,  like  the  Sher- 
man Law,  is  a  criminal  statute  creating  new  conditions  (page  149,  supra) 
and  that  intent  and  motive  are  controlling  factors  in  proceedings  there- 
under; also,  that  whereas  common  law  rights  of  property  may  not  be 
taken  away,  due  process,  i.  e.,  the  "rules  of  the  road,"  may  be  changed,  if 
public  exigencies  so  require.  (See  pages  77-Bi,  supra;  also,  generally, 
Addystone  Case,  175  U.  S.  211,  affirming  85  Fed.  171,  and  Straus  Case,  231 
U.  S.  222.) 

13  Blount  Mfg.  Co.  v.  Yale  &  Towne,  166  Fed.  555,  562;  Standard  Sani- 
tary Mfg.  Co.  v.  U.  S.,  226  U.  S.  20,  33  Sup.  Ct.  9»  57  L.  Ed.  107;  affirming 
191  Fed.  172. 


PATENTS  AND  COPYRIGHTS.  195 

be  said  that  if  the  combining  or  restraining  contract  operates  in 
direct  restraint  of  interstate  commerce  the  statutes  are  violated. 

Right  to  Exclude  is  Distinct  from  Right  to  Sell.— There  is 
a  basic  difference  between  these  several  rights.  The  "exclusive 
right  to  their  respective  writings  and  discoveries"  which  Congress, 
under  Article  I,  Section  8,  of  the  Constitution,  is  empowered  to 
secure  to  inventors  "to  promote  the  progress  of  science  and  the 
useful  arts,"  if  taken  literally,  means  the  power  to  exclude  others 
from  interfering  with  profitable  exploitation  thereof.  Congress 
translated  this  power  into  a  statutory  grant  of  "the  sole  and  ex- 
clusive right  and  liberty  of  making,  using  and  vending  to  others." 
(See  page  185,  supra.) 

Thoughtful  consideration  of  the  subject  must  make  it  apparent 
that  the  word  "exclusive"  contains  the  only  right  which  the  Con- 
stitution and  the  resultant  statutes  confer  upon  authors  and  in- 
ventors. The  power  to  make,  use  and  vend  was  theirs  already, 
under  the  common  law,  and  could  not  be  taken  away  by  any 
government  authority,  State  or  national,  even  under  that  most 
elastic  function — the  exercise  of  police  powers.14 

The  ability  to  exclude  others  is  the  measure  of  the  new 
power  given  them  by  the  patent  law,  and  is  confined  to  and 
regulated  by  the  provisions  thereof,  and  as  a  portion  of  the  grant 
thus  circumstanced  and  limited  the  right  to  sell  is  subject  to  such 
requirements  and  terms  as  the  legislating  body  has  seen  fit  to 
provide.  Hence  it  will  be  seen  that  the  Anti-trust  laws  are  appli- 
cable in  the  case  of  patented  as  of  unpatented  articles,  and  that  the 
provisions  intended  to  prevent  or  overcome  restraints  of  interstate 
trade  and  monopolies  are  of  universal  application. 

It  follows  that  within  the  monopoly  conferred  by  the  patent 
law,  the  patentee  is  absolute  dictator.  He  may  refuse  to  utilize  it 
at  all,  or  he  may  reserve  its  use  absolutely  to  himself,  at  his  sole 
election.  Even  where  he  suppresses  the  device  by  refusing  to 
employ  it  himself  or  to  permit  others  to  use  it,  he  is  but  suppress- 
ing his  own.  "A  suppression  can  endure  but  for  the  life  of  the 
patent,  and  the  disclosure  he  has  made  will  enable  all  to  enjoy  the 
fruit  of  his  genius."15  But  he  cannot  lawfully  enter  into  a  con- 
tract to  suppress  his  discovery  (p.  191,  supra). 

The  inventor  may  make  or  use  his  discovery  under  his  grant  of 
monopoly ;  but  if  he  sells  his  product,  it  passes  into  the  general 

14  Allen  v.  Riley,  203  U.  S.  347- 

15  Heaton-Peninsular,  Etc.,  Co.  v.  Eureka  Specialty  Co.,  77  Fed.  288,  25 
C.  C.  A.  267,  35  L.  R-  A.  728;  47  U.  S.  App.  146,  160. 


196  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

channels  of  trade  and  the  ordinary  rules  and  regulations  common 
to  commercial  affairs  apply. 

Medical  Compounds. — The  rules  generally  applicable  to  ar- 
ticles protected  by  letters  patent  are  in  like  force  and  effect  as  to 
proprietary  medicines.  The  discussions  of  that  subject  are  for 
the  most  part  contained  in  cases  which  turned  upon  the  right  of 
the  manufacturer  to  prevent  cut-rate  prices  by  fixing  the  charge 
which  the  retailer  shall  make  to  the  consumer.  It  has  uniformly 
been  held  in  the  leading  decisions  that  such  regulation  of  re-sales 
was  in  restraint  of  trade  and  therefore  void.16 

Secret  Concoctions  Not  Favored. — In  some  instances  the  med- 
ical preparations  are  made  by  secret  formulas  and  are  outside  of 
the  protection  of  the  patent  laws.  In  these  cases  there  is  discern- 
ible a  distinct  tendency  to  restrict  the  proprietor  to  his  common 
law  rights. 

"The  owner  of  the  trade  secret  gives  nothing  to  the  pub- 
lic, the  value  of  his  property  being  dependent  upon  its 
secrecy.  Hence  public  policy,  as  expressed  in  statutes  or 
decisions,  favors  the  statutory  and  opposes  the  natural 
monopoly."17 

See  also  the  "trinity  of  decisions"  covering  the  subject  of  price- 
fixing  contracts,  mentioned  at  pages  192-3,  supra. 

Extent  of  Exclusive  Rights  Fixed. — It  is  fortunate  that  the 
nature  and  extent  of  the  patentee's  exclusive  right  to  "make,  use 
and  vend,"  have  been  considered  and  fixed  by  the  courts.  The 
task  of  the  Federal  Trade  Commission  will  be  much  lessened  by 
rulings  which  mark  out  the  extent  to  which  that  board  can  prop- 
erly exercise  its  powers  when  seeking  to  prevent  or  restrain 
abuses  which  relate  to  patented  articles  in  commerce. 

3.  COPYRIGHT  LAWS  AS  CONSTRUED  UNDER  ANTI- 
TRUST STATUTES. 

Source  of  Power. — As  has  been  shown  at  a  former  place  in  this 
chapter  (page  185,  supra),  the  laws  conferring  exclusive  rights 
upon  authors  and  upon  inventors  result  from  the  same  constitu- 
tional grant  of  power. 

Great  Benefits  Derived. — No  other  feature  of  our  national  life 
outside  of  agriculture  and  mining  has  proved  so  productive  as  the 

16  Dr.  Miles  Medical  Co.  v.  John  D.  Park  &  Sons  Co.,  220  U.  S.  373,  31 
Sup.  Ct.  376,  55  L.  Ed.  902 ;  affirming  164  Fed.  803. 

17  William  J.  Shroder,  in  25  Harvard  Law  Review,  p.  59,  etc.  (Nov., 
1911). 


PATENTS  AND  COPYRIGHTS.  197 

creative  power  thus  nurtured  and  stimulated;  and  it  might  ap- 
pear upon  fuller  investigation  that  the  resultant  material  and  in- 
tellectual effects  of  this  ability  to  originate  have  a  value  in  excess 
of  either  of  those  two  fields  of  profitable  labors.  Certain  it  is 
that  such  American  inventions  as  sowing  and  reaping  machinery, 
telegraphs,  telephones,  kodaks,  and  sewing-machines  are  coexten- 
sive with  civilization  and  even  seem  to  form  a  part  thereof ;  while 
the  works  of  Emerson,  Longfellow,  Holmes  and  Irving  are  a  com- 
plete answer  to  the  remark — "Who  reads  an  American  book?" 
— attributed  to  the  oracular  Dr.  Johnson. 

In  numerous  fields  the  inventive  genius  of  America  has  out- 
stripped its  competitors  and  impressed  the  effect  of  new  world 
conditions  and  exigencies  upon  old  world  training  and  methods  of 
thought.  If  an  equal  pinnacle  has  not  been  attained  in  things  liter- 
ary, such  conditions  may  be  attributed  to  the  immaturity  of  youth ; 
and  in  the  words  of  Lord  Chatham,  this  is  "a  defect  which  age 
will  cure." 

The  copyright  laws  have  for  their  purpose  the  stimulation  of 
talent  for  creating  work  in  literary  and  artistic  lines  and  the  ad- 
vancement of  literature  and  art,  while  the  patent  laws  seek  to 
promote  the  advancement  of  the  liberal  arts  and  sciences. 

Distinction  Noted. — The  philosophy  and  reasoning  back  of 
the  exclusive  grant  to  authors  is  somewhat  different  from  that 
which  has  produced  the  system  of  patent  laws.  Whether  rightly  or 
wrongly,  the  public  looks  upon  the  latter  as  essentially  an  induce- 
ment to  the  inventor  to  disclose  some  discovery  what  might  other- 
wise remain  indefinitely  hidden  beneath  the  protection  of  a  secret 
process. 

Rights  of  Author  and  Patentee  Distinguished. — In  the  nature 
of  things,  it  is  not  the  manufacture  or  individual  use  by  the  cre- 
ator of  copyrighted  books,  etc.,  which  is  the  essential  element  of 
value;  in  this  particular  the  copyright  is  different  from  the 
right  of  monopoly  which  the  patentee  obtains.  On  the  other 
hand,  it  is  the  exclusive  right  to  publish  and  circulate  which  is 
the  particular  privilege  sought  by  the  author  and  which  constitutes 
the  essential  feature  and  source  of  profit  of  his  monopoly. 

Anti-trust  Laws  Govern  Methods  of  Selling  Copyrighted 
Articles. — When  the  publication  has  begun  and  the  goods  are 
placed  on  sale  the  author  or  owner  of  copyright  exceeds  his 
powers  thereunder  if  he  enters  a  combination  to  fix  prices  at 
which  the  retailer  shall  sell  and  otherwise  regulate  the  extent  and 
manner  in  which  the  protected  articles  shall  be  marketed  after 


198  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

they  have  passed  into  the  channels  of  general  trade.  Especially 
is  this  true  where  the  resultant  restraint  is  country-wide  and  no 
purchaser  can  obtain  the  books,  etc.,  except  upon  terms  imposed 
by  this  arbitrary  and  artificial  system  of  price-fixing : 

"As  the  combination  extends  throughout  the  United 
States  by  the  very  terms  of  the  agreement,  interstate  com- 
merce is  necessarily  restrained."18 

Infractors  Not  Entitled  to  Relief. — Authors  and  owners  of 
copyrights  will  be  refused  the  aid  of  equity  courts  when  it  is 
sought  to  compel  the  contracting  party  to  carry  out  the  agreed 
terms  of  his  stipulation,  and  it  appears  that  they  are  parties  to 
such  combinations. 

"The  complainant  confessedly  is  a  party  to  the  combina- 
tion and  the  agreement,  and  cannot,  if  it  be  illegal,  have  a 
standing  in  a  court  of  equity  to  enforce  any  part  of  it,  di- 
rectly or  indirectly.  When  the  complainant  comes  into 
court,  asking  equity,  it  must  come  with  clean  hands,  as 
far  as  the  transaction  involved  is  concerned."19 

Violation  of  Printed  Notice  is  not  Infringement. — In  this 
case,  which  is  the  principal  authority  upon  certain  phases  of  copy- 
right law,  the  court  held  it  was  not  an  infringement  of  the  copy- 
right law  to  sell  books  for  less  than  one  dollar  per  volume,  where 
the  title  had  passed  to  the  retailer  by  absolute  purchase  and  sale, 
notwithstanding  a  signed  prohibition  printed  on  the  reverse  of  the 
title  page,  that — "The  price  of  this  book  at  retail  is  one  dollar  net. 
No  dealer  is  licensed  to  sell  it  at  a  less  price,  and  a  sale  at  a  less 
price  will  be  treated  as  an  infringement  of  the  copyright." 

Before  arriving  at  this  conclusion,  the  court  holds  that  an  in- 
fringement consists  solely  in  selling  or  importing  without  author- 
ity, one  or  more  copies  of  an  unauthorized  edition  of  the  work  in 

18  Bobbs-Merrill  Co.  v.  Straus,  139  Fed.  155 ;  affirmed,  147  Fed.  15,  77 
C.  C  A..  407,  15  L.  R.  A.  N.  S.  766,  210  U.  S.  339,  28  Sup.  Ct.  722,  52  L.  Ed. 
1086.    See  also,  Bobbs-Merrill  Co.  v.  Snellenberg,  131  Fed.  530,  and  Straus 
v.  American  Publishing  Assoc'n,  177  N.  Y.  473,  69  N.  E.  1107,  64  L.  R. 
A.  701 ;  affirming  93  N.  Y.  App.  Div.  86,  N.  Y.  Supp.  1091,  also,  231  U.  S. 
222,  where  the  Supreme  Court  holds  that  the  Sherman  Law  interdiction 
applies   to   copyrighted   as   well   as   to   uncopyrighted   books ;     Mines   v. 
Scribner,  147  Fed.  927;   Bobbs-Merrill  Co.  v.  Straus,  supra,  distinguished 
in  Henry  v.  Dick  Co.,  224  U.  S.  I,  43,  32  Sup.  Ct.  364,  56  L.  Ed.    Also, 
consult,  generally,  Thornton,  "Sherman  Anti-trust  Act," — Chapter  XVII, 
"Copyrighted  Books." 

19  Bobbs-Merrill  Co.  v.  Straus,  139  Fed.  155. 


PATENTS  AND  COPYRIGHTS.  199 

question ;  hence  the  use  of  such  term  in  connection  with  author- 
ized publications  was  misleading  because  unwarranted  in  law. 
Such  act  is  at  most  a  violation  of  contract ;  and  under  that  phase 
no  right  to  recovery  can  be  shown. 

"If  the  publisher  of  the  book,  being  the  proprietor  of 
the  copyright,  parts  with  the  title  to  such  book,  either  a 
single  copy  or  a  number  of  copies,  and  receives  his  pay 
therefor,  he  has  voluntarily  parted  with  all  control  over 
that  or  those  particular  books.  *  *  *  the  absolute 
ownership  of  an  article  of  personal  property  carries  with  it 
the  right  to  give  away  or  sell  for  such  consideration  as  the 
owner  sees  fit  to  impose,  prescribe,  or  demand,  so  long  as 
he  violates  no  law."20 

So  in  the  leading  case  before  noted  relating  to  a  patented  article, 
the  Supreme  Court  held21  to  the  same  effect;  and  as  matters 
stand  it  seems  to  be  settled  law  that  neither  the  patentee  nor  the 
holder  of  a  copyright  can  fix  the  retail  price,  after  the  goods 
have  passed  into  the  absolute  ownership  and  possession  of  an 
owner  not  under  valid  contract  with  the  owner  of  the  patent  or 
the  copyright.  Furthermore,  the  same  ruling  has  been  applied 
to  like  practices  in  connection  with  wares  which  do  not  come 
within  either  of  the  protected  classes.22 

Retaining  Title  in  Property,  Owner  Preserves  Right  to 
Fix  Price. — The  converse  of  the  legal  proposition  last  stated 
makes  price-fixing  proper  and  valid  where  the  retailer  operates 
only  under  a  license,  and  the  ownership  of  the  book  remains  in 
the  holder  of  the  copyright.  Whether  the  business  of  book-sell- 
ing can  be  conducted  under  a  system  of  licensing  so  broad  as  to 
include  the  entire  retail  trade  remains  to  be  seen ;  but  if  such  a 
course  is  practicable  there  is  no  apparent  reason  why  the  sales 
could  not  be  dominated  in  that  way.23 

This  ruling  appears  sound  in  the  forum  of  logic  and  patent 
and  copyright  law ;  but  the  further  question  as  to  whether  such  a 
situation  discloses  a  restraint  of  trade  or  a  monopoly,  will  remain 
to  be  tried  out  according  to  the  then  existing  provisions  of  the 

20  Bobbs-Merrill  Co.  v.   Straus,   139  Fed.   155.     See  authorities  cited 
under  footnote  18,  supra. 

21  Bauer  &  Cie  v.  O'Donnell,  229  U.  S.  I. 

22  Dr.  Miles  Medical  Co.  v.  Park  &  Sons  Co.,  220  U.  S.  373. 

23  Such  is  the  trend  of  the  ruling  in  Henry  Brill  Publishing  Co.  v. 
Smythe,  27  Fed.  914;  and  this  authority  is  quoted  with  approval  in  Harri- 
son v.  Maynard,  etc.,  Co.,  61  Fed.  689,  10  C.  C.  A.  17,  26  U.  S.  App.  99. 


2oo  MANUAL  of  FEDERAL  TRADE:  COMMISSION. 

Anti-trust  statutes  when  that  as  yet  hypothetical  case  takes  on 
actual  substance  and  form. 

Comparison  of  Privileges  under  Patent  and  Copyright  Laws. 
— As  has  been  said  (pages  186-7,  supra),  the  construction  of  the 
patentee's  rights  is  accorded  a  latitude  which  does  not  extend  to 
the  holder  of  copyright  privileges.  This  attitude  is  felt  rather 
than  seen  upon  the  face  of  the  reports;  but  there  are  two  in- 
stances which  should  be  noticed  and  discussed : 

FIRST  :    PATENT  RIGHTS  REST  UPON  A  BROADER  GRANT,  AND  AC- 
CORDINGLY COVER  A  MORE  EXTENSIVE  FIELD. 

This  interesting  topic  has  been  quite  fully  dwelt  upon  and 
analyzed  in  the  leading  patent  case,  (Bauer  &  Cie  v.  O'Donnell, 
229  U.  S.  I,)  where  the  distinction  is  noted  and  reason  therefor 
stated : 

"This  grant  [to  the  inventor]  as  defined  in  Bloomer  v. 
McQuewan,  14  How.  539,  549,  consists  altogether  in  the 
right  to  exclude  every  one  from  making,  using  or  vending 
the  thing  patented.  Thus,  there  are  several  substantive 
rights,  and  each  is  the  subject  of  subdivision,  so  that  one 
person  may  be  permitted  to  make,  but  neither  to  sell  or  use 
the  patented  thing.  To  another  may  be  conveyed  the  right 
to  sell,  but  within  a  limited  area,  or  for  a  particular  use, 
while  to  another  the  patentee  may  grant  only  the  right  to 
make  and  use,  or  to  use  only  for  specific  purposes." 

The  court  then  passes  to— 

"the  differences  in  the  terms  of  the  copyright  and  the 
patent  statutes,  the  patent  act  conferring  not  only  the  right 
to  make  and  sell,  but  the  exclusive  right  to  use  the  subject 
matter  of  the  patent."  (The  italics  appear  in  the  original 
opinion.) 

Therefore,  it  is  officially  stated  by  the  Supreme  Court  that  the 
right  to  make  and  sell  is  the  extent  of  the  right  conferred  under 
the  copyright  law ;  whereas  the  patent  laws  contain  the  additional 
exclusive  right  to  use — a  grant  materially  broader  in  its  practical 
effect. 

SECOND  :  RULE  THAT  ANTI-TRUST  DEFENCES  CANNOT  BE  INTER- 
POSED TO  SUITS  FOR  INFRINGEMENT  OF  PATENT  RIGHTS,  is 
NOT  APPLIED  IN  SIMILAR  COPYRIGHT  CASES. 

In  the  leading  case  under  copyright  law  (Bobbs-Merrill  Co.  v. 


PATENTS  AND  COPYRIGHTS.  201 

Straus,  page  199,  supra),  the  fact  is  noted  that  violations  of  Anti- 
trust laws  cannot  be  set  up  in  actions  for  impairment  of  patentee's 
rights  through  infringement ;  but  it  is  stated  that  such  ruling  does 
not  apply  in  copyright  cases  of  that  description.  Section  4964, 
of  the  Revised  Statutes,  as  amended,  defines  infringement  of 
copyright  as  printing,  publishing,  etc.,  the  protected  work  or 
selling  the  same  without  the  written  consent  of  the  holder  of 
the  copyright.  Thus  the  field  for  infringement  of  a  copyright  is 
narrower  and  quite  different  from  the  infringement  of  the  pat- 
entee's device,  and  a  moment's  reflection  will  be  sufficient  to  show 
that  whereas  the  defence  of  restraint  of  trade  or  monopoly  might 
well  be  interposed  in  proceedings  under  the  former,  it  could  not 
be  employed  with  equal  force  when  the  suit  was  based  upon  the 
right  which  a  patent  confers.  In  brief,  the  "exclusive  right  of 
making,  using  and  vending"  is  a  very  broad  grant,  and  affords  a 
wider  scope  of  franchise  than  that  which  the  exclusive  right  to 
make  and  vend  confers  on  the  holder  of  a  copy-right. 

The  statement  in  Strait  v.  National  Harrow  Co.,  51  Fed.  819: 
"Such  a  monopoly  may  be  an  odious  and  wicked  one,  but  the 
proposition  that  the  plaintiff  while  infringing  the  rights 
vested  in  the  defendant  under  letters  patent  of  the  United  States 
is  entitled  to  stop  the  defendant  from  bringing  or  prosecuting  any 
suit  therefor  because  the  defendant  is  an  obnoxious  corporation 
*  *  *  is  a  novel  one  and  entirely  unwarranted,"  (page  190, 
supra),  closes  the  door  to  further  discussion  of  the  claim  that 
proof  of  monopoly  can  operate  as  a  bar  in  disputes  concerning  the 
infringement  or  priority  of  inventions;  and  the  opposite  ruling 
as  to  Anti-trust  defences  in  copyright  cases  seems  equally  estab- 
lished. 

4.  PROTECTION  OF  PUBLIC  IS  END  SOUGHT  BY  ANTI- 
TRUST LAWS. 

Author  and  Inventor  also  Concerned. — When  considering 
matters  connected  with  the  enactment  and  enforcing  of  the  Anti- 
trust laws  it  frequently  transpires  that  the  interests  of  the  orig- 
inator of  the  patented  or  copyrighted  device,  process  or  work 
are  much  more  at  stake  than  the  interests  of  the  community  that 
uses  the  device,  process  or  work  or  by  its  use  renders  profitable 
the  property  in  question.  In  fact,  it  often  occurs  that  whereas 
unfair  and  unrestricted  competition  would  for  the  moment  benefit 
the  public  through  a  rapid  and  radical  reduction  in  price,  such 


2O2  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

practices  in  the  end  would  spell  destruction  to  the  author  or  in- 
ventor. 

Combinations  may  be  formed  to  overcome  or  undersell  useful 
inventions  or  other  new  productions  and  to  crowd  them  out  of 
the  market  by  means  which  involve  unfair  or  underhand  deal- 
ings; and  where  wealth  and  business  ability  are  allied  against 
him,  the  originator  has  often  been  compelled  to  submit  to  the  loss 
of  years  of  earnest  effort  along  useful  lines.  Thus  it  very  fre- 
quently happens  that  the  inventor  and  the  author  are  concerned 
at  least  in  equal  measure  with  the  public  in  the  prohibition  of 
those  "unfair  methods  of  competition  in  commerce"  which  it  is 
the  purpose,  province  and  function  of  the  Federal  Trade  Com- 
mission to  prevent,  in  protection  of  public  interests. 

These  methods  have  been  in  evidence  in  every  State  and  Terri- 
tory, not  to  mention  the  Insular  Possessions  and  the  other  places 
under  the  jurisdiction  of  the  United  States,  and  the  necessity  for 
reforming  and  curative  measures  has  not  passed  unnoticed  by 
writers  of  authority  upon  the  subject. 

A  recent  writer,  when  discussing  broadly  the  effect  of  such 
practices  upon  the  rights  of  proprietors  of  trade-marks  and  trade- 
names,  has  treated  the  subject  in  a  manner  that  appears  equally 
applicable  to  those  interests  concerned  in  the  ownership  of 
patents  and  copyrights: 

"Unfair  competition  is  not  confined  to  acts  directed 
against  the  owners  of  trade-marks  or  trade-names,  but 
exists  wherever  unfair  means  are  used  in  trade  rivalry. 
Equity  looks  not  at  what  business  the  parties  before  the 
court  are  engaged  in,  but  at  the  honesty  or  dishonesty  of 
their  acts.  It  is  unfair  to  pass  off  one's  goods  as  those 
of  another  person;  it  is  unfair  to  imitate  a  rival's  trade 
name  or  label;  but  he  who  seeks  to  win  trade  by  fair 
means  or  foul  is  not  limited  to  those  methods.  He  may 
copy  or  imitate  the  actual  goods  made  or  sold  by  a  com- 
petitor *  *  *  thus  producing  confusion  in  the  minds 
of  purchasers,  which  enables  him  to  purloin  his  rivals' 
trade,  and  in  a  hundred  other  unfair  ways  secure  another's 
trade.  All  acts  done  in  business  competition  are  either 
fair  or  fraudulent,  equitable  or  inequitable,  whether  they 
relate  to  marks  or  not ;  and  it  is  believed  that  the  question 
of  trade-marks  will  soon  be  lost  sight  of  in  discussing  un- 


PATENTS  AND  COPYRIGHTS.  203 

fair  competition,  in  the  problem  of  securing,  through  the 
principles  of  equity,  full  protection  to  every  merchant 
against  unfair  business  methods."2* 

The  same  author  traces  the  source  of  the  term  "fair  competi- 
tion" or  "unfair  competition"  to  a  decision  by  Lord  Elden  in 
i8o3,25  and  concludes:  "It  is,  then,  in  reality  the  name,  unfair 
competition,  that  is  new,  not  the  theory  bearing  the  name;  and 
relief  formerly  given  *  *  *  was  relief  based  on  the  prin- 
ciples of  unfair  competition."26 

Genesis  of  Application  of  Anti-trust  Ideas  to  General  Busi- 
ness Methods. — Perhaps  it  may  be  permitted  to  deal  briefly  with 
the  origin  of  the  inclusion  of  unfair  trade  methods  within  the 
Anti-trust  prohibitions, — a  cause  which  was  not  without  able 
advocates,  as  appears  from  the  extracts  contained  in  the  preced- 
ing paragraph. 

The  history  of  the  movement  to  protect  business  good-will  con- 
troverts the  charge  that  the  administration  of  President  Wilson 
was  anti-corporation  in  establishing  the  Trade  Commission.  In 
this  connection  it  is  interesting  and  instructive  to  note  that  it 
was  William  Howard  Taft,  sitting  as  a  member  of  the  Circuit 
Court  of  Appeals,  Sixth  District,  in  1898,  who  first  applied  the 
Sherman  Act  to  the  ordinary  industrial  combination.  His  defini- 
tion of  interstate  commerce  is  very  inclusive,  viz : 

"*  *  *  the  soliciting  of  orders  for,  and  the  sale  of 
goods  in  one  State,  to  be  delivered  from  another  State,  is 
interstate  commerce  in  its  strictest  and  highest  sense. 
*  *  *  If  this  extends  Federal  jurisdiction  into  fields 
not  before  occupied  by  the  general  government,  it  is  not 
because  such  jurisdiction  is  not  within  the  limits  allowed 
by  the  Constitution  of  the  United  States."27 

Ex-President  Taft  has  confirmed  those  early  expressions  in 
the  following  words: 

"It  is  hard  to  reach  any  other  conclusion,  after  consid- 
eration of  the  old  legislation  and  the  new,  than  that  unfair 

24  Nims,  Unfair  Business  Competition,  2. 

25  Hogg  v.  Kirby,  8  Vesey  215. 

26  Nims,  Unfair  Business  Competition,  13. 

27  U.  S.  v.  Addystone  Pipe,  etc.,  Co.,  85  Fed.  271,  806,  814;  affirmed,  175 
U.  S.  an. 


204  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

competition  only  includes  those  methods  and  practices  in 
interstate  trade  the  effect  and  intent  of  which  would  bring 
them  within  the  scope  and  condemnation  of  the  first  and 
second  sections  of  the  Sherman  Act." 

The  public  sentiment  thus  voiced  by  authority  found  its  way 
into  the  platforms  of  the  respective  political  parties,  and  the  Bal- 
timore platform  promised  relief  in  the  declaration — 

"A  private  monopoly  is  indefensible  and  intolerable." 

It  was  to  effectuate  this  pledge  that  President  Wilson  urged 
upon  Congress  the  enactment  of  legislation  supplementing  the 
Sherman  Act  and  making  its  principles  of  broader  application,  in 
the  hope  and  expectation  that  this  course  would  reduce  rather 
than  enlarge  the  volume  of  prosecutions  required  to  protect  hon- 
est business  from  encroachment  through  unfair  means. 

Referring  to  the  situation  prior  and  subsequent  to  the  passage 
and  approval  of  the  Federal  Trade  Commission  Act  and  Clayton 
Law,  President  Wilson  has  said : 

"*  *  *  there  was  no  law  to  check  the  practices  by 
which  monopoly  was  built  up  until  the  tree  was  full  grown 
and  its  fruit  developed,  or,  at  any  rate,  until  the  full  op- 
portunity for  monopoly  had  been  created.  With  this  new 
legislation  there  is  clear  and  sufficient  law  to  check  and 
destroy  the  noxious  growth  in  its  infancy." 

Ability  and  Prestige  of  Sponsors  of  Legislation  Reinforcing 
and  Enlarging  Anti-trust  Laws. — These  sentiments  represent 
more  than  mere  opinions  of  citizens  of  highest  repute  and  abil- 
ity; they  stand  out  in  bold  relief  as  sentiments  of  typical  mem- 
bers of  opposing  parties  who  have  joined  in  a  common  expression 
of  the  needs  of  the  business  interests  in  furtherance  of  the  com- 
mon good.  One  is  a  spokesman  of  the  legal  profession  who 
adorned  a  judicial  position  of  great  importance  and  subsequently 
was  elevated  to  the  office  of  chief  magistrate;  the  other  has  re- 
ceived equal  honors  after  service  as  Governor  of  a  State  and  as 
presiding  officer  of  a  university. 

The  Federal  Trade  Commission  is  the  outcome  of  mature  de- 
liberation by  Congress,  aided  and  approved  by  citizens  who  in- 
dividually and  officially  are  the  exponents  of  the  progressive 
spirit  of  the  times. 


PATENTS  AND  COPYRIGHTS.  205 

It  is  hoped  and  believed  that  the  Commission  will  be  mindful 
of  the  mandate  it  has  received  from  the  people  and  of  the  sterling 
qualities  of  its  sponsors,  and  that  this  semi- judicial  body  will 
justify  the  deliberations  and  the  judgment  of  those  who  are  re- 
sponsible for  acceding  to  an  awakened  public  conscience  by  this 
reinforcement  and  enlargement  of  the  Anti-trust  laws.  That  a 
movement  so  broad  and  so  deep  will  include  benefits  to  numerous 
interests,  is  assured ;  and  the  rights  of  authors  and  inventors  will 
be  certain  to  share  in  the  equal  protection  which  the  Anti-trust 
laws,  thus  supplemented,  provide  for  every  citizen. 


CHAPTER  XVI. 

UNFAIR    TRADING    IN     RELATION    TO     TRADE- 
MARKS AND  TRADE  NAMES. 

1.  An  Ancient  Problem. 

2.  Good  Will  a  Topic  of  Wide  Significance. 

3.  Unfair  Trade  Methods. 

4.  Deceptive  Words  and  Emblems. 

5.  Imitators  Display  Endless  Ingenuity. 

i.  AN  ANCIENT  PROBLEM. 

Experience  Adjusts  Problems. — It  is  one  of  the  fortunate—- 
or unfortunate — features  of  older  social  organizations  and  gov- 
ernments that  certain  questions  of  necessity  have  been  worked 
out,  reduced  to  a  system  and  filed  away  in  the  pigeonholes  of 
things  accomplished,  before  corresponding  problems  arise  to  vex 
the  mind  in  jurisdictions  instituted  at  a  later  date. 

Monopoly  an  Incident  to  Chartered  Companies. — Thus,  the 
trust  question  with  its  various  ramifications  of  monopolistic 
tendencies  in  business  had  been  met  and  to  a  considerable  degree 
conquered  during  the  period  when  the  chartered  companies  of 
England  and  Holland  flourished  and  were  in  possession  of  by  far 
the  greater  portion  of  this  continent.  In  fact,  the  rights  con- 
ferred by  King  Charles  the  Second,  in  1670,  were  so  extensive 
that  the  Hudson  Bay  Company  claimed  title  in  fee  to  territories 
equal  to  the  whole  expanse  of  Europe.  That  those  rights  were 
no  empty  grant  is  seen  by  their  commutation  for  a  one-twentieth 
interest  in  the  Canadian  public  lands  under  a  compromise  effected 
in  1870,  and  confirmed  by  the  Parliament  of  that  Dominion,  there- 
by terminating  a  tenure  extending  through  two  centuries.  It  is 
true  this  phase  of  history  has  no  direct  connection  with  the  topic 
before  us,  but  it  is  nevertheless  of  some  service  in  pointing  out 
and  emphasizing  the  fact  that  at  a  period  when  bison-trails  were 
the  only  roads  and  savage  tribes  the  only  inhabitants  of  western 
plains  destined  to  become  great  and  powerful  States — in  Europe 
the  forces  of  organized  society  were  slowly  but  surely  evolving 
solutions  for  the  intricate  questions  that  form  an  integral  pa:  t  of 
or  at  least  are  incident  to  existence  under  the  forms  of  modern 
civilized  life. 

206 


TRADE-MARKS  AND  TRADE  NAMES.  207 

2.  GOOD  WILL  A  TOPIC  OF  WIDE  SIGNIFICANCE. 

Good  Will  Defined. — The  subject  of  good  will  may  properly 
be  defined  so  broadly  as  to  include  the  right  of  the  individual  to 
the  patronage  flowing  out  of  his  enterprise,  skill  and  approved 
methods  in  commerce. 

Government  Offers  Monopoly  to  Induce  Disclosure. — Where 
a  person  has  developed  something  new,  the  State,  by  its  patent 
and  copyright  laws,  offers  an  inducement  for  the  disclosure  of  his 
invention  or  writing ;  and  grants  him  exclusive  rights  therein  for 
a  limited  number  of  years,  upon  condition  that  his  contribution  to 
progress  shall  become  public  property  at  the  end  of  that  period. 
Usually  that  offer  is  accepted;  and  the  limited  monopolies  per- 
taining to  patents  and  copyrights  are  conditions  which  flow  from 
such  grants.  Sometimes  the  proffer  of  the  governme.it  is  in- 
effectual, and  the  inventor  prefers  to  keep  his  own  counsels  and 
to  put  his  confidence  in  the  loyalty  of  his  employees  or  the  diffi- 
culty of  duplicating  his  discovery;  and  in  those  instances  his 
product  is  made  under  a  secret  process.  Perhaps  the  most  no- 
table example  of  this  retention  of  inventor's  rights  is  seen  in  the 
manufacture  of  powdered  metal  by  Sir  Henry  Bess-emer,  under 
a  method  never  disclosed.  This  reticence  is  said  to  be  due  to  a 
sense  of  inadequacy  of  reward  from  patents  involving  disclosures 
of  discoveries  connected  with  the  manufacture  of  steel ;  and  thus 
society  is  in  danger  of  losing  the  benefit  which  would  ultimately 
follow  if  the  secret  were  divulged  in  exchange  for  conventional 
patent-rights. 

Attacks  on  Originator's  Rights  Considered. — Good  will  in 
business,  as  we  have  seen,  is  protected  by  grants  in  various  forms, 
in  conformity  to  the  rights  of  the  individual  applicant ;  and  while 
the  subject  is  not  necessarily  confined  to  traders'  rights  which  are 
recognized  and  confirmed  by  statutes,  our  attention  will  be  direct- 
ed mostly  to  such  rights  and  to  the  efforts  to  destroy  or  impair  the 
patronage  and  profits  resulting  therefrom 

3.  UNFAIR  TRADE  METHODS. 

Unfair  Trading  Includes  Unfair  Copying. — The  genesis  of  the 
term  "unfair  methods  of  competition  in  commerce,"  contained  in 
Section  5  of  the  Federal  Trade  Commission  Act,  and  Section  n 
of  the  Clayton  Law,  is  found  in  the  desire  to  unduly  benefit  by 


2o8  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

the  labor  of  others, — a  desire  not  limited  to  any  period  or  clime. 
The  term  "unfair  trading,"  or  "unfair  competition,"  is  recognized 
in  Great  Britain  under  the  words,  "passing  off";  in  France  the 
language  is  "concurrence  deloyale";  while  in  Germany  the  term 
employed  is,  "unlauter  Wettbewerb."  It  was  a  known  practice  in 
the  Middle  Ages,  and  we  find  a  decree  of  the  council  of  Nurem- 
berg in  the  year  1512,  providing: 

"Whereas,  a  certain  foreigner,  who  sells  engravings 
under  the  council  chamber,  has,  among  others,  certain  ones 
bearing  the  signatures  of  Albrecht  Diirer,  therefore,  it  is 
ordered  that  he  shall  obliterate  all  such  signatures,  and 
keep  no  more  such  engravings  in  future,  and  if  he  shall 
neglect  so  to  do,  he  shall  be  brought  before  the  council  of 
fraud." 

Ancient  Penalty  Severe. — As  early  as  the  thirteenth  century, 
copying  of  trade-marks  was  made  a  felony  in  France  and  else- 
where; and  during  that  period  the  Elector  Palatine  hanged  inn- 
keepers who  sold  spurious  wines  labelled  Rudesheimer. 

Law  of  Infringement  a  Slow  Development. — In  England  the 
courts  were  slow  to  recognize  private  rights  in  trade  names  and 
trade-marks.  Lord  Hardwicke  in  1742,  refused  to  enjoin  a  trader 
from  using  a  mark  previously  appropriated  by  another  trader, 
and  it  was  not  until  a  century  later,  in  1842,  that  Lord  Langdale 
laid  down  the  correct  rule  in  a  suit  to  restrain  the  use  of  an  imi- 
tative label.  He  said : 

"I  think  the  principle  on  which  the  courts  both  of  law 
and  of  equity  proceed,  in  granting  relief  and  protection 
in  cases  of  this  sort,  is  very  well  understood.  A  man  is  not 
to  sell  his  own  goods  under  the  pretence  that  they  are  the 
goods  of  another  man ;  he  cannot  be  permitted  to  practice 
such  a  deception,  nor  to  use  the  means  that  contribute  to 
that  end.  He  cannot,  therefore,  be  allowed  to  use  names, 
marks,  letters,  or  other  indicia,  by  which  he  may  induce 
purchasers  to  believe  that  the  goods  which  he  is  selling  are 
the  manufacture  of  another  person.  I  own  it  does  not 
seem  to  me  that  a  man  can  acquire  a  property  merely  in  a 
name  or  mark ;  but  whether  he  has  or  not  a  property  in  the 
name  or  mark,  I  have  no  doubt  that  another  person  has 
not  a  right  to  use  that  name  or  mark  for  the  purpose  of 


TRADE-MARKS  AND  TRADE  NAMES.  209 

deception,  and  in  order  to  attract  to  himself  that  course  of 
trade,  or  that  custom  which,  without  that  improper  act, 
would  have  flowed  to  the  person  who  first  used,  or  was 
alone  in  the  habit  of  using,  the  particular  name  or  mark."1 

The  question  turned  upon  the  right  to  employ  the  mellifluent 
title,  "Medicated  Mexican  Balm,"  and  the  case  is  interesting  be- 
cause Lord  Langdale  was  in  advance  of  his  times ;  and  while  the 
application  was  denied  upon  the  ground  that  petitioner  had  made 
a  false  statement  of  fact  in  respect  to  the  origin  of  the  formula, 
the  true  basis  on  which  such  relief  will  be  granted  in  a  proper 
case,  is  clearly  and  correctly  set  forth.  The  establishment  of  the 
general  rule  that  no  one  has  a  right  to  pass  off  his  wares  as  the 
goods  of  another,  involved  much  labor  by  the  courts ;  and  it  was 
not  finally  so  determined  until  1896. 

Trade  Protection  in  United  States. — In  the  United  States  the 
question  of  trade  protection  was  also  receiving  consideration  dur- 
ing the  same  period.  In  1791,  Samuel  Breck,  of  Boston,  peti- 
tioned Congress  for  permission  to  designate  and  mark  his  sail- 
cloth by  a  registered  trade-mark.  The  petition  was  referred  to 
Jefferson,  at  that  time  Secretary  of  State ;  and  in  his  report  he 
said  favorable  action  would,  in  his  opinion — 

"contribute  to  fidelity  in  the  execution  of  manufacturing, 
to  secure  to  every  manufacturer  an  exclusive  right  to  some 
mark  on  its  wares,  proper  to  itself. 

"That  this  should  be  done  by  general  laws,  extending 
equal  rights  to  every  case  to  which  the  authority  of  Con- 
gress should  be  competent." 

Long  Delay  Required. — The  nation,  however,  was  obliged  to 
wait  seventy-nine  years  for  the  partial  fulfilment  of  this  recom- 
mendation ;  and  it  was  not  until  1905,  that  really  adequate  provi- 
sions were  made  effective.  In  New  York  a  law  against  "fraud 
in  the  use  of  false  stamps  and  labels,"  was  enacted  in  1845,  an^ 
in  the  interval  between  that  year  and  1866,  similar  laws  were 
provided  in  Connecticut  (1847),  Pennsylvania  (1847),  Massachu- 
setts (1850),  Ohio  (1859),  Iowa  (1860),  Michigan  (1863),  Ore- 
gon (1864),  Nevada  (1865),  Kansas,  Maine  and  Missouri  (1866). 

All  these  statutes  looked  to  the  protection  of  the  public  against 

I  Perry  v.  Truefitt,  6  Beav.  66,  citing  with  approval  Pidding  v.  How, 
8  Sim.  477  (1837). 
14 


zio  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

adulterated  and  spurious  goods,  however,  rather  than  to  the  ac- 
knowledgment and  safeguarding  of  individual  rights  resulting 
from  excellence  in  quality  and  established  reputation  in  trade.  It 
is  only  since  1890,  that  cases  in  the  United  States  based  upon 
trade-marks  and  kindred  rights  have  been  at  all  numerous.  Up 
to  and  including  1870,  only  sixty-two  such  cases  appear  in  the 
reports. 

General  Requisites  for  Protection. — Advertising  has  injected 
value  into  many  of  these  badges  of  origin  and  proprietorship, 
and  the  very  natural  desire  to  reap  the  full  benefits  from  expen- 
sive campaigns  of  publicity  has  led  to  repeated  appeals  to  courts 
for  the  establishment  and  protection  of  the  resultant  property 
rights.  It  should  be  noted  that  where  the  complainant  is  shown 
to  be  guilty  of  similar  acts,  he  for  like  reasons  is  barred  from 
redress. 

Since  the  public  in  selecting  between  competitive  articles  or 
commodities  is  usually  influenced  by  one  of  four  factors,  viz: 
the  person  who  manufactures  it,  the  place  where  it  is  made,  the 
material  of  which  it  is  composed,  and  the  purpose  it  is  intended 
to  accomplish,  it  may  be  stated  generally  that  assertions  as  to  any 
of  these  four  elements  of  trading  are  material,  and  if  false,  will 
disqualify  the  guilty  party  from  obtaining  redress  or  protection 
in  courts  of  equity. 

A  favorite  method  of  unfair  trading  has  consisted  of  singling 
out  one  competitor  and  cutting  prices  as  to  him,  while  maintain- 
ing the  regular  price  elsewhere  in  the  trade.  Probably  a  rule 
that  cutting  must  be  general,  would  obviate  this  difficulty.  An- 
other unfair  practice  consists  in  buying  a  few  special  articles  with 
a  fixed  price  and  drawing  the  intending  purchasers  by  this  attrac- 
tion, and  then  selling  them  something  else  at  a  less  price. 

In  view  of  the  endless  variety  and  ceaseless  procession  of  cases 
which  are  constantly  arising  in  the  conflict  between  unfair  trading 
and  the  provisions  and  doctrines  of  the  statutes  and  the  common 
law,  it  will  be  advisable  to  forego  dwelling  longer  upon  the  gen- 
eralities of  this  contest  between  restrictive  laws  and  commercial 
cunning,  and  to  devote  our  immediate  attention  to  specific  in- 
stances of  unfair  methods  of  business  dealings  in  their  relation  to 
trade-marks  and  trade  names. 

4.  DECEPTIVE  WORDS  AND  EMBLEMS. 

Misuse  of  Names  of  Places. — This  abuse  of  language  is  diffi- 
cult to  combat,  for  it  would  seem  at  first  sight  that  it  Smith  es- 


TRADE-MARKS  AND  TRADE  NAMES.  211 

tablished  a  cannery  of  shrimp  at  Barataria  Bay  and  styled  his 
wares,  "Barataria  Shrimp,"  Jones  would  have  an  equal  right  to 
locate  on  an  adjoining  site  and  to  employ  a  similar  name — a  title 
which  would  appear  to  be  honestly  descriptive  and  naturally  ap- 
purtenant to  such  proprietorship.  No  doubt  there  are  very  nu- 
merous instances  and  indeed,  whole  classes  of  situations  where 
no  legal  right  to  redress  would  exist  although  the  confusion  and 
disarrangement  or  even  loss  of  trade  would  amount  to  a  consid- 
erable element  of  damage.  Thus,  a  store-keeper  might  lawfully 
open  an  adjoining  store  dealing  in  goods  identical  with  those  of 
a  liberal  advertiser,  and  so  long  as  no  effort  was  made  to  counter- 
feit the  name  or  to  mislead  the  public  as  to  their  identity,  no  legal 
damage  could  be  shown,  although  trade  was  diverted  and  lower 
prices  (because  of  the  saving  in  advertising  expenditures)  were 
offered  to  customers. 

Long  Use  Pre-empts  Name. — Reverting  to  our  first  example, 
however,  the  rights  of  the  first  comer  as  to  name  and  distinctive 
marks,  are  recognized  when  seasoned  and  established  in  the  pub- 
lic mind.  This  privilege  is  an  incident  to  fair  trade  and  of  course, 
crowds  out  the  opposite  contention,  relegating  it  to  the  region  of 
practices  constituting  "unfair  competition."  A  celebrated  Amer- 
ican case  consisted  in  an  application  to  restrain  a  rival  concern 
from  employing  the  word  "  Waltham"  as  a  trade  name  for  watches. 
The  competitor  was  actually  located  in  that  city  and  its  wares 
were  produced  there;  nevertheless  Justice  Holmes  (now  of  the 
United  States  Supreme  Court)  issued  an  injunctive  order — 
qualified,  however,  by  the  right  of  the  defendant  to  continue  such 
designation,  if  coupled  therewith  there  appeared  the  explanatory 
statement,  "not  manufactured  by  the  original  Waltham  Watch 
Company." 

This  action  on  the  part  of  the  Supreme  Court  of  Massachusetts 
was  based  upon  the  theory  that  the  name  "Waltham"  watches 
had  come  to  have  a  meaning  that  stood  for  style  and  quality, 
rather  than  place  of  origin;  and  that  the  latter  significance  had 
become  a  matter  of  minor  importance.  The  learned  Justice  ap- 
proaches and  deals  with  the  subject  convincingly: 

«  *  *  *  we  think  that  now  it  is  pretty  well  settled 
that  the  plaintiff,  merely  on  the  strength  of  having  been 
first  in  the  field,  may  put  later  comers  to  the  trouble  of 
taking  such  reasonable  precautions  as  are  commercially 


212  MANUAL,  01?  FEDERAL  TRADE  COMMISSION. 

practicable  to  prevent  their  lawful  names  and  advertise- 
ments from  deceitfully  diverting  the  plaintiff's  custom. 
*  *  *  It  is  desirable  that  the  plaintiff  should  not  lose 
custom  by  reason  of  the  public  mistaking  another  manu- 
facturer for  it.  It  is  desirable  that  the  defendant  should 
be  free  to  manufacture  watches  at  Waltham  and  to  tell 
the  world  that  it  does  so.  The  two  desiderata  cannot  both 
be  had  to  their  full  extent,  and  we  have  to  fix  the  bound- 
aries as  best  we  can.  On  the  one  hand  the  defendant 
must  be  allowed  to  accomplish  its  desideratum  in  some 
way,  whatever  the  loss  to  the  plaintiff.  On  the  other,  we 
think  the  cases  show  that  the  defendant  fairly  may  be  re- 
quired to  avoid  deceiving  the  public  to  the  plaintiff's  harm, 
so  far  as  is  practicable  in  a  commercial  sense."2 

False  Use  of  Name  Illicit. — That  prior  and  long  continued  use 
of  a  geographical  name  ripens  into  a  property  right  which  confers 
privileges  upon  the  owner,  is  now  too  well  settled  for  more  ex- 
tended discussion;  and  the  right  of  course,  includes  protection 
against  pretenders  who  are  located  elsewhere.  Thus,  the  An- 
heuser-Busch Brewing  Company  prevented  another  brewer  from 
using  the  word  "St.  Louis,"  on  beer  brewed  in  another  city  ;3  sim- 
ilar action  was  taken  with  respect  to  a  brand  of  Durham  Smok- 
ing Tobacco,4  and  the  most  famous  case  of  all  resulted  in  restrain- 
ing a  Chicago  firm  from  selling  flour  made  in  Milwaukee,  under 
the  trade  name,  "Best  Minnesota  Patent,  Minneapolis,  Minn."5 
Upon  the  application  of  Oxford  University  the  same  principle 
was  applied  to  unauthorized  editions  of  "Oxford"  Bibks,  printed 
in  the  United  States.9 

Right  to  Protection  Established. — Perhaps  it  is  safe  to  as- 
sert as  settled  law  that  where  a  person  starts  a  competing  busi- 
ness and  undertakes  to  appropriate  without  agreement  or  com- 
pensation the  benefit  of  a  name  which  represents  a  reputation  it 

2  American  Waltham  Watch  Co.  v.  U.  S.  Watch  Co.,  173  Mass.  85,  53 
N.  E.  141 ;  73  Am.  St.  Rep.  263,  43  L.  R.  A.  826. 

3  Anheuser-Busch  Brewing  Assoc'n  v.  Piza,  24  Fed.  149-50-51  (1885)  ; 
cited  in  Nims,  "Unfair  Business  Competition,"  page  243. 

4  Blackwell  v.  Alibrell,  3  Hughes  (U.  S.),  151,  3  Fed.  Cas.  No.  i,  475, 
14  OS.  Gaz.  633. 

5  Pillsbury-Washburn  Flour  Mills  Co.,  Ltd.,  v.  Eagle,  86  Fed.  608,  30 
C.  C.  A.  386,  41  L.  R.  A.  162. 

6  Oxford  University  v.  Wilmore-Andrews  Pub.  Co.,  101  Fed.  443. 


TRADE-MARKS  AND  TRADE  NAMES.  213 

has  taken  years  of  fair  dealing,  or  much  advertising,  or  both,  to 
establish  on  a  firm  basis,  he  engages  in  a  practice  the  law  will  not 
countenance  or  tolerate,  and  he  thereby  becomes  amenable  to 
those  provisions  intended  to  preserve  fair  play  in  business  and 
to  prevent  such  unfair  methods.  This  item  is  an  asset — a  species 
of  good  will — and  where  it  attaches  to  a  geographical  name  that 
in  effect  stands  for  the  manufacturer  or  the  wares,  the  courts  will 
prevent  the  appropriation  thereof  by  a  new  comer. 

Misuse  of  Names  of  Persons. — While  it  is  true  that  an  in- 
dividual has  proprietary  rights  in  his  name  and  may  employ  it 
in  connection  with  any  honest  trade  or  calling,  these  rights,  like 
most  other  personal  attributes  must  be  employed  in  a  manner  that 
will  not  injure  his  business  neighbor.  Especially  is  this  true 
where  the  use  is  plainly  intended  to  gain  an  unfair  advantage. 
The  instances  afforded  in  the  reported  cases  are  interesting  and 
instructive. 

Recent  Rulings  Incline  to  Lenity. — The  courts,  however,  have 
in  a  number  of  decisions  recognized  the  right  of  the  fortunate 
possessors  of  names  well  and  favorably  known  in  commercial 
circles,  to  use  them  with  certain  restrictions  designed  to  avoid 
confusion  between  their  wares  and  the  advertised  products.  The 
situation  may  be  said  to  have  reached  a  point  where  the  un- 
fair trade  cases  are  so  conflicting  that  each  case  stands  on  its 
own  individual  merits  and  facts.  Thus  when  Royal,  a  citizen  of 
Louisville,  entered  the  business  field  as  a  manufacturer,  and  of- 
fered his  product  under  the  name  "Royal  Baking  Powder,"  the 
court  recognized  his  legal  right  to  make  this  article,  but  required 
him  to  confine  his  name  to  the  back  label  of  his  cans.7  In  a 
State  court,  a  bicycle  repairman  who  engaged  in  the  manufacture 
of  silverplated  ware  was  compelled  to  use  his  full  name — 
"William  H.  Rogers,"  or  "W.  H.  Rogers,"  joined  with  the  words, 
"not  connected  with  the  original  Rogers,"  displayed  in  type  of  at 
least  equal  size  and  distinctness,  for — "the  court,  in  this  class  of 
cases,  interferes  only  to  the  extent  of  preventing  the  defendant 
company  from  passing  off  its  goods  as  complainant's  goods."8 

The  chocolate  business  of  Walter  Baker  &  Co.  was  begun  in 
1780,  at  Worcester,  Mass.,  and  for  more  than  fifty  years  had 
been  conducted  under  its  present  name,  when,  in  1894,  a  com- 

7  Royal  Baking  Powder  Co.  v.  Royal,  122  Fed.  337,  58  C.  C.  A.  499. 

8  Internat.  Silver  Co.  v.  Wm.  H.  Rogers  Corp.,  66  N.  J.  Eq.  119,  139, 
57  Atl.  1037. 


214  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

peting  product  was  marketed  by  William  H.  Baker,  of  Winches- 
ter, Va.  To  avoid  confusion  and  loss,  the  court  compelled  the  sell- 
ing agent  of  the  new  concern  to  place  in  prominent  type  upon 
every  package:  "W.  H.  Baker  is  distinct  from  and  has  no  con- 
nection with  the  old  chocolate  manufactory  of  Walter  Baker  and 
Company."9 

In  a  recent  decision,  the  United  States  Circuit  Court  of  Appeals 
for  the  Fourth  District  has  confirmed  this  doctrine  governing  the 
right  to  use  one's  own  name  as  a  trade  name.10 

Relief  Should  Fit  Individual  Needs. — In  brief,  whereas  the 
use  of  the  name  of  a  person  cannot  be  absolutely  enjoined,  never- 
theless the  manner  of  such  use  and  exploitation  may  be  regulated 
to  suit  the  peculiar  requirements  of  the  case  in  hand.  The  rule 
is  stated  by  the  United  States  Supreme  Court  in  a  leading  deci- 
sion, in  the  following  words : 

"A  person  is  not  obliged  to  abandon  the  use  of  his  name 
or  to  unreasonably  restrict  it.  The  question  is  whether  his 
use  is  reasonable  and  honest,  or  is  calculated  to  deceive."11 

It  appears  that  something  approaching  fraud  must  be  shown 
in  the  use  of  personal  names,  to  entitle  a  competitor  to  relief ;  but 
where  that  element  is  present  the  situation  discloses  what  is  held 
to  be  an  instance  of  "unfair  trade,"  and  the  injured  person  may 
look  to  the  courts  for  redress. 

Misuse  of  Descriptive  Terms. — In  England  a  large  trade  had 
been  developed  in  the  "Camel"  brand  of  "Camel  Hair  Belting" 
used  as  a  substitute  for  leather  belting  in  tropical  countries.  A 
former  salesman  adopted  the  title  and  attempted  to  divert  the 
business  to  himself.  The  proprietor  of  the  original  article  brought 
suit  for  an  injunction  upon  the  ground  that  the  substitute  was  an 
inferior  article  and  that  long  use  had  so  identified  his  name  with 
the  goods  that  persons  purchasing  wares  under  that  particular 
brand  believed  them  to  be  exclusively  of  his  manufacture.  The 
lower  courts  held  for  the  defendants  upon  the  ground  that  putting 
out  goods  under  a  fancy  title  did  not  warrant  protection  to  the 

9  Walter  Baker  &  Co.  v.  Sauders,  80  Fed.  889.    For  decisions  in  other 
"Baker  Chocolate"  cases,— see  77  Fed.  181;    87  Fed.  209;   97  Fed.  948; 
115  Fed.  297;   130  Fed.  514. 
"  10  Guth  v.  Guth  Chocolate  Co.,  224  Fed.  932 ;  see  cases  there  cited. 

ii  Howe  Scale  Co.  v.  Wyckoff,  198  U.  S.  118,  137,  25  Sup.  Ct.  609,  49 
L.  Ed.  972. 


TRADE-MARKS  AND  TRADE  NAMES.  215 

owner,  in  a  court  of  equity.  Upon  appeal  to  the  House  of  Lords, 
the  case  was  reversed  upon  the  grounds — (i)  that  the  proprietor 
had  acquired  a  valuable  asset  in  the  nature  of  a  good  will,  and  (2) 
that  the  public  should  be  made  certain  that  their  purchases  were 
manufactured  by  the  firm  identified  with  the  trade  name.  One 
of  the  Law  Lords  thus  expressed  his  views: 

"But  fraud  is  infinite  in  its  variety;  sometimes  it  is 
audacious  and  unblushing;  sometimes  it  pays  a  sort  of 
homage  to  virtue,  and  then  it  is  modest  and  retiring;  it 
would  be  honesty  itself  if  it  could  only  afford  it.  But 
fraud  is  fraud  all  the  same;  and  it  is  the  fraud,  not  the 
manner  of  it,  which  calls  for  the  interpretation  of  the 
court."12 

English  Rule  now  Recognized  and  Enforced  in  United 
States. — Misleading  purchasers  into  the  belief  that  they  are  buy- 
ing the  goods  of  another  manufacturer  has  been  held  unlawful  in 
the  United  States ;  and  the  rule  stated  in  Reddaway  v.  Banham, 
is  now  equally  in  effect  in  our  courts.13 

Deceptive  Labels  and  Packages. — That  more  or  less  mythical 
person  the  "unwary  purchaser,"  is  not  without  his  friends  and 
protectors,  as  the  decisions  abundantly  show.  In  fact,  efforts  to 
divert  his  attention  and  patronage  are  among  the  most  common 
forms  of  unfair  competition. 

Unfair  Substitution. — The  difficulty  really  consists  in  the 
ability  of  the  dealer  to  substitute  the  counterfeit  article  and  to  pre- 
vent any  opportunity  for  comparison.  If  the  purchaser  had  actu- 
ally before  his  eyes  and  subject  to  his  inspection,  packages  labelled 
respectively  "Iwanta  Biscuit"  and  "Uneeda  Biscuit,"14  there  is  lit- 
tle likelihood  he  would  prove  himself  "unwary,"  but  on  the  con- 
trary, it  is  almost  certain  he  would  select  the  familiar  brand. 
Where  only  the  first  (substituted)  package  is  shown  him,  he  does 
not  think  so  quickly  or  deeply  as  to  detect  the  subterfuge;  and 
provided  the  quality  and  amount  are  substantially  the  same,  he 

12  Reddaway  v.  Banham  (1896),  A.  C.  199,  65  L.  J.  Queen's  Bench  381, 
74  L.  T.  Rep.  N.  S.  289,  44  Weekly  Rep.  638. 

13  American  Tobacco  Co.  v.  Polacsek,  170  Fed.  117;   see  Coca  Cola  Co. 
v.  National  Syrup  Co.,  215  Fed.  527  (June  13,  1914),  and  cases  therein 
cited,  also,  Penna.  Rubber  Co.  v.  Dreadnaught  Fire  Co.,  225  Fed.  138  (July 
24,  1915),  Wade  Di-t.  Reporter,  Nov.,  1915,  p.  I. 

14  National  Biscuit  Co.  v.  Baker,  95  Fed.  135 ;   Id.  v.  Ohio  Baking  Co., 
127  Fed.  127,  160;  Id.  v.  Swick,  121  Fed.  1007;  also,  see  Scheuer  v.  Mul- 
ler,  20  C.  C.  A.  165  (note)  ;  Lare  v.  Harper,  30  C.  C.  A.  (note). 


216  MANUAL  OP  FEDERAL  TRADE  COMMISSION. 

suffers  no  real  damage, — it  is  the  manufacturer  who  is  injured. 
The  reputation  amounting  to  a  good  will  which  years  of  fair 
dealing  and  much  advertising  have  impressed  upon  the  public 
mind  counts  for  nothing  in  the  face  of  such  tactics  on  the  part  of 
the  retailer,  and  the  courts  have  very  promptly  and  properly  en- 
joined the  use  of  the  word  "Iwanta"  in  the  biscuit  trade. 

Sound  Sense  Essential  to  Just  Rulings. — In  such  cases  courts 
are  called  upon  to  place  themselves  in  the  position  of  the  average 
person  who  goes  forth  to  bargain  for  his  or  her  daily  supply  of 
household  necessities ;  and  we  can  test  the  judgment  of  the  courts 
by  our  own  opinion  as  to  the  fairness  of  the  methods  employed  by 
traders,  in  such  transactions.  Sound  sense  is  essential  to  just 
rulings  in  such  cases  and  it  has  been  well  said,  "a  variation  will 
be  regarded  as  immaterial  which  requires  a  close  inspection  to 
detect."15 

Leading  Cases  Illustrative  of  Above  Principle. — A  few  illus- 
trations will  best  display  the  principle  which  governs  this  phase 
of  business  dealings.  Humphrey's  Specifics  are  a  form  of  homeo- 
pathic remedies  which  for  more  than  a  generation  have  been  dis- 
pensed to  the  public  under  numbers  "i"  to  "35."  It  was  held 
that  such  long  use  of  those  numerals  had  come  to  indicate  to  the 
trade  one  particular  origin  and  ownership,  and  constituted  fair 
notice  not  to  trespass;  and  the  rival  drug  house  was  enjoined.18 

Even  when  a  patent  has  expired,  and  the  name  has  become  pub- 
lic property,  such  words  as  "Singer,"  when  applied  to  an  article 
of  common  domestic  use,  "must  be  accompanied  with  such  indica- 
tions as  will  show  by  whom  it  is  made  so  that  the  public  may  be 
informed  of  that  fact."17 

The  Coleman  spice  house  had  for  seventeen  years  supplied  the 
trade  with  "Bull's  Head  Mustard."  No  other  firm  was  employing 
that  label,  and  the  manufacturers  considered  the  likelihood  of  any 
imitation  so  improbable  that  they  did  not  take  the  precaution  to 
copyright  their  mark,  nor  to  register  it  nor  in  any  manner  to  com- 
ply with  the  laws  of  the  United  States  which  relate  to  trade- 
marks. When  a  manufacturer  of  labels,  however,  after  such 

15  Febridge  v.  Wells,  4  Abb.  Pr.  (N.  Y.)  144,  13  How.  Pr.  385.    See  also 
Merrimack  Mfg.  Co.  v.  Garner,  4  E.  D.  Smith  (N.  Y.)  387,  2  Abb.  Pr.  318. 

16  Humphrey's  Homeopathic  Medicine  Co.  v.  Wenz,  14  Fed.  250. 

17  Singer  Mfg.  Co.  v.  June  Mfg.  Co.,  163  U.  S.  169,  16  Sup.  Ct.  1002, 
41  L.  Ed.  118;  cited  in  Joffe  v.  Evans,  70  (N.  Y.)  App.  Div.  189,  75  N.  Y. 
Supp.  257. 


TRADE-MARKS  AND  TRADE  NAMES.  217 

long  use  had  familiarized  the  public  with  this  particular  brand, 
began  the  sale  of  almost  identical  labels  to  other  manufacturing 
dealers  in  mustard,  the  court  did  not  refuse  its  protection  to  the 
original  maker.18 

As  might  be  expected,  the  proprietors  of  "Castoria"  have  not 
retained  their  customers  unchallenged  by  the  swarm  of  imitators 
which  surrounds  a  successful  enterprise.  In  resisting  such  an  as- 
sault (after  the  name  had  become  public  property),  it  was  proven 
that  the  defendant  had  copied  the  color,  type,  arrangement  and 
general  appearance  of  complainants'  wrapper.  In  deciding  the 
case,  the  court  said : 

"Bearing  in  mind  that  the  complainants'  wrapper  was 
well  known  to  the  trade  for  years  before  the  adoption  of 
that  of  the  defendant,  it  is  impossible,  in  view  of  the  ac- 
cumulated resemblance,  to  avoid  the  conclusion  that  these 
similarities  were  not  the  result  of  chance,  but  are  charge- 
able to  design."19 

The  Federal  court  has  well  summarized  the  situation  presented 
by  cases  to  restrain  unfair  means  of  diverting  trade  when  it  said, 
in  affording  protection  against  imitators  of  Hire's  Root  Beer: 

"An  action  like  the  present  proceeds     *    *    *    upon 
the  principle  that  one  may  not,  by  means  lawful  in  them- 
selves when  devoted  to  a  lawful  end,  perpetuate  a  fraud 
upon  the  public,  or  infringe  the  rights  of  another."20 
That  imitators  are  no  respecters  of  persons  but  rather,  moth- 
like,  are  attracted  by  the  light  of  conceded  excellence,  is  common 
knowledge.     Literary  distinction  and  reputation  offer   shining 
marks,  as  seen  in  efforts  to  duplicate  "The  Harvard  Classics — Dr. 
Eliot's  Five-foot  Shelf  of  Books,"21  and  in  the  "Chatter-Box" 
cases.22    In  each  instance  the  court  held  that  originality  and  use 
had  conferred  property  rights. 

18  Colman  v.  Crump,  70  N.  Y.  573. 

19  Centaur  Co.  v.  Killenberger,  87  Fed.  725  (1898). 

20  Chas.  E.  Hires  Co.  v.  Consumers'  Co.,  100  Fed.  809  (1900),  Id.  v. 
George  A.  Hires,  182  Pa.  St.  346  (1897),  37  Atl.  1117. 

21  Collier  v.  Jones,  66  Misc.  (N.  Y.)  97,  120  N.  Y.  Suppl.  991 ;  modified 
in  140  N.  Y.  App.  Div.  911,  125  N.  Y.  Suppl.  1116. 

22  Estes  v.  Williams,  21  Fed.  189,  190.    Later  cases  in  which  the  fore- 
going decision  is  approved  and  followed:   Estes  v.  Worthington,  31  Fed. 
154,  24  Blatch.  371 ;  Estes  v.  Worthington,  30  Fed.  465 ;  Estes  v.  Leslie,  27 
Fed.  22,  23  Blatch.  476;  Estes  v.  Worthington,  22  Fed.  822,  23  Blatch.  65; 
Estes  v.  Belford,  30  Off.  Gaz.  99. 


218  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

Petitioners  must  come  with  "Clean  Hands." — Of  course,  it 
is  not  every  complainant  that  is  entitled  to  the  court's  aid.  Those 
who  are  seeking  some  unfair  advantage  or  are  engaged  in  work- 
ing off  some  worthless  product  will  not  be  protected  from  assaults 
by  others  of  the  same  class.  Indeed,  the  assurance  of  some  liti- 
gants is  amazing  and  affords  a  source  of  amusement  to  readers  of 
decisions,  as  it  no  doubt  did  to  the  courts  which  were  in  duty 
bound  to  pass  upon  the  questions  thus  propounded. 

An  instance  of  this  assurance  in  its  most  aggravated  form  ap- 
pears in  the  early  decisions.  The  proprietor  of  a  concoction  in 
the  form  of  a  cosmetic  rejoicing  in  the  euphonious  title,  "The 
Balm  of  a  Thousand  Flowers,"  obtained  a  temporary  injunction 
restraining  a  rival  from  employing  the  still  grander  name,  "The 
Balm  of  Ten  Thousand  Flowers."23  The  proofs  showed  it  to  be 
compounded  of  oil,  ashes  and  alcohol ;  whereupon  the  judge  dis- 
solved the  injunction  and  refused  relief  on  the  ground  that  an 
article  so  composed,  containing  no  trace  of  elixir  from  any  flower, 
was  calculated  to  attract,  deceive  and  impose  upon  the  public.  In 
its  opinion  the  court  intimated  that  taking  the  claims  of  such 
mendacious  dealers  at  their  face  value,  it  was  folly  to  grow  old 
and  a  mistake  to  die.24 

5.  IMITATORS  DISPLAY  ENDLESS  INGENUITY. 

Expansive  Term  Required. — The  framers  of  the  Federal 
Trade  Commission  Act  were  wise  in  abiding  by  their  determina- 
tion to  refrain  from  any  definition  whatever  of  "unfair  methods 
of  competition  in  commerce,"  recognizing  that  to  meet  and  over- 
come new  forms  of  deceit  and  unfairness  as  they  arise,  the  term 
itself  must  remain  elastic.  That  time  will  justify  this  course, 
there  can  be  no  doubt.  As  was  well  said  by  one  of  the  Law  Lords 
of  the  British  court  of  last  resort  in  the  leading  case  of  Redda- 
way  v.  Banham  (page  215,  supra}  :  "But  fraud  is  infinite  in  its 
variety" ;  and  we  acknowledge  his  wisdom  by  foregoing  any  at- 
tempt to  enumerate  all,  or  even  a  considerable  portion  of  the 
classes  of  schemes  predatory  persons  have  contrived  in  order  to 

23  Fetridge  v.  Wells,  4  Abb.  (N.  Y.)  144  (1857). 

24  For  other  illustrations  of  the  principles  applied  by  the  courts  when 
passing  upon  cases  of  this  description,  see  page  247,  ante;  also,  generally, 
— Nims  on  "Unfair  Business  Competition,"  and  an  article  by  William  B. 
Hale  on  "Trade-Marks,  Trade  Names  and  Unfair  Competition,"  in  38 
"Cyc,"  page  674,  etc. 


TRADE-MARKS  AND  TRADE;  NAMES.  219 

extract  unfair  profits  from  the  efforts  and  investments  of  their 
competitors. 

Manifold  Forms  of  Deceit. — Appearances  intended  to  deceive ; 
equivalents  that  confuse  buyers;  substitution;  false  representa- 
tions ;  unfair  advertising ;  imitating  the  style  of  business  names ; 
counterfeiting  the  goods  themselves — are  a  few  instances  of  this 
infinite  variety  of  subterfuges.  In  view  of  the  subdivisions  and 
re-subdivisions  which  are  and  always  will  be  thought  out  and 
attempted  while  human  nature  remains  what  it  is,  no  rational 
being  should  endeavor  to  compress  all  the  types  of  this  familiar 
form  of  chicanery  into  the  space  of  a  single  paragraph.  Nor  will 
we  attempt  it  here. 

Principles  of  Fair  Dealing  Constitute  Sole  Guide. — The 
Federal  Trade  Commission  like  the  courts  when  dealing  with  the 
subject  of  "fraud" — a  term  purposely  left  undefined  in  order  that 
it  may  be  construed  to  include  new  phases  as  they  appear — will 
find  that  it  must  steer  by  the  compass  of  sound  judgment  through 
applying  recognized  doctrines  to  particular  cases,  whenever 
charges  of  "unfair  competition"  are  before  it.  The  end  sought 
to  be  accomplished  must  be  what  fair  dealing  requires. 

Appropriate  Judicial  Ruling. — In  this  connection  we  consider 
ourselves  fortunate  to  find  judicial  language  appropriate  to  a 
condition  where  some  novel  form  of  unfair  advantage  in  trade  is 
disclosed  and  where  the  guilty  party  seeks  to  justify  the  fraud  or 
imposture  by  sophistry  in  place  of  reason.  A  Federal  Court  of 
Appeals  has  said  when  passing  upon  an  ingenious  attempt  to  over- 
reach and  defraud: 

"Property,  even  as  distinguished  from  property  in  intel- 
lectual production,  is  not,  in  its  modern  sense,  confined  to 
that  which  may  be  touched  by  the  hand,  or  seen  by  the  eye. 
What  is  called  tangible  property  has  come  to  be,  in  most 
great  enterprises,  but  the  embodiment,  physically,  of  an 
underlying  life — a  life  that,  in  its  contribution  to  success,  is 
immeasurably  more  effective  than  the  mere  physical  em- 
bodiment. Such,  for  example,  are  properties  built  upon 
franchises,  on  grants  of  government,  on  good  will,  or  on 
trade  names,  and  the  like.  It  is  needless  to  say,  that  to 
every  ingredient  of  property  thus  made  up — the  intangible 
as  well  as  the  tangible,  that  which  is  discernible  to  mind 
only,  as  well  as  that  susceptible  to  physical  touch — equity 


22O  MANUAL,  OF  FEDERAL,  TRADE  COMMISSION. 

extends  appropriate  protection.  Otherwise  courts  of 
equity  would  be  unequal  to  their  supposed  great  purposes ; 
and  every  day,  as  business  life  grows  more  complicated, 
such  inadequacy  would  be  increasingly  felt. 

"Nowhere  is  this  recognition  by  courts  of  equity  of  the 
intangible  side  of  property  better  exemplified,  than  in  the 
remedies  recently  developed  against  unfair  competition  in 
trade.  An  unregistered  trade  name  or  mark  is,  in  essence, 
nothing  more  than  a  symbol,  conveying  to  the  eye  and  ear 
information  respecting  origin  and  identity ;  as  if  the  manu- 
facturer, present  in  person,  and  pointing  to  the  article, 
were  to  say,  'These  are  mine' ;  and  the  injunctive  remedy 
applied  is  simply  a  command  that  this  form  of  speech — 
this  method  of  saying,  These  are  mine — shall  not  be  in- 
truded upon  unfairly  by  a  like  speech  of  another. 

"Standing  apart,  the  symbol  or  speech  is  not  property. 
Disconnected  from  the  business  in  which  it  is  utilized  it 
cannot  be  monopolized.  But  used  as  a  method  of  making 
an  enterprise  succeed,  so  that  its  appropriation  by  another 
would  be  a  distinctive  injury  to  the  enterprise  to  which  it 
is  attached,  the  name,  or  mark,  becomes  at  once  the  sub- 
ject-matter of  equitable  protection.  Here,  as  elsewhere, 
the  eye  of  equity  jurisdiction  seeks  out  results,  and  though 
the  immediate  thing  to  be  acted  upon  by  the  injunction  is 
not  itself,  alone  considered,  property,  it  is  enough  that  the 
act  complained  of  will  result,  even  though  somewhat  re- 
motely, in  injury  to  property.  *  *  *  Are  we  to  fail 
our  plain  duty  for  mere  lack  of  precedent?  We  choose, 
rather,  to  make  precedent."25 

Another  later  decision  by  the  same  court  approves  the  doctrine 
thus  announced,  and  so  far  as  we  know  it  has  not  been  questioned. 
This  quotation  from  said  other  decision  is  of  interest  as  showing 
the  tendency  of  the  courts  to  recognize  and  protect  incorporeal 
rights  as  well  as  tangible  rights : 

"So  it  is  apparent  that  something  more  is  involved  here 
than  the  question  of  rights  flowing  from  the  sale  and  pur- 
chase of  original  Prest-O-Lite  gas  packages.  That  some- 
thing more  is  an  incorporeal  right  that  may  best  be  called 

25  National  Tel.  News  Co.  et  al.  v.  Western  Union  Tel.  Co.,  119  Fed. 
294. 


TRADE-MARKS  AND  TRADE  NAMES.  221 

service,  the  right  to  serve  and  be  served  without  interfer- 
ence from  outsiders.  Such  a  right,  as  a  species  of  prop- 
erty, has  been  recognized  and  upheld.  *  *  *  While 
service  is  not  trade  in  articles  of  commerce,  and  while 
trade-marks,  as  such,  must  actually  be  put  upon  articles 
of  commerce  or  their  containers,  we  see  no  reason  why 
an  intending  servitor  may  not  offer  his  service  under  an 
arbitrary  name  or  sign  as  well  as  under  his  real  name. 
And  the  ultimate  fact  of  importance  is  that  in  the  auto- 
mobile world  Prest-O-Lite  came  to  stand,  not  only  for  the 
physical  article,  but  also  for  the  incorporeal  right  to  serve 
and  be  served.  *  *  *  Appellee  is  entitled  to  have  its 
lifeblood  saved  from  leeches  and  its  nest  from  cuckoos."28 

Development  of  Unfair  Competition  Law. — That  this  whole- 
some view  is  neither  new  nor  strange  is  abundantly  shown  by  the 
writings  of  those  qualified  to  speak  on  the  subject.  An  earlier 
authority  has  thus  noted  and  commented  upon  the  growth  of 
means  to  prevent  dishonest  or  unfair  competition:  "Not  yet 
fully  adopted  by  all  the  courts,  still  to  be  developed  in  its  applica- 
tion to  particular  circumstances  and  conditions,  this  broad  prin- 
ciple of  business  integrity  and  common  justice  is  the  product  and 
the  triumph  of  the  development  of  the  law  of  trade-marks  in  the 
last  half  century,  and  the  bulwark  which  makes  possible  and  pro- 
tects the  world-wide  business  reputations  common  and  growing 
more  common  in  this  new  country."27 

General  Conclusion  Deduced  from  Authorities. — As  de- 
duced from  the  decisions  and  authorities  generally,  the  rule 
is  now  quite  clear  that  utilization  of  the  names  of  persons,  places, 
etc.,  and  the  various  forms  of  emblems  employed  in  trade  will  be 
restricted  or  prohibited  where  they  lead  to  confusion  or  deceit, 
and  result  in  the  passing  off  of  goods  differing  in  source  of  manu- 
facture, nature  or  quality,  from  those  the  intending  purchaser 
purposed  to  acquire. 

26  Searchlight  Gas   Co.  v.   Prest-o-Lite   Co.,  215  Fed.  692.     See  also 
other  cases  referred  to  in  this  decision. 

27  W.  K.  Townsend    "Two  Centuries   Growth   of  American  Law," — 
cited  in  Nims'  "Unfair  Business  Competition,"  page  2. 


CHAPTER  XVII. 

UNFAIR  METHODS  AS  SEEN  IN  ABUSES  OF  COR- 
PORATE CONTROL. 

1.  Unfair  Manipulation  and  Conduct. 

2.  Unfair  Exercise  of  Voting  Power. 

Useful  Comparisons. — Information  useful  for  our  purpose 
is  contained  in  those  reported  cases  that  define  and  apply  the 
rules  and  principles  of  equity  in  corporation  actions  which  turn 
on  the  element  of  unfairness;  and  the  substance  of  those  de- 
cisions will  now  be  shown  as  an  aid  to  interpreting  the  phrase 
"unfair  methods  of  competition  in  commerce"  (Section  5  of 
Federal  Trade  Commission  Act)  which  constitutes  the  essence 
of  the  recent  enactments  intended  to  supplement  and  make  effec- 
tive the  Anti-trust  laws. 

Rule  in  Patent  and  Copyright  Cases. — In  the  absence  of  de- 
cisions stating  the  position  of  the  Federal  Trade  Commission  in 
respect  to  delimiting  the  prohibitions  against  "unfair  methods" 
contained  in  the  creating  statute,  it  is  a  fortunate  circumstance 
that  the  corresponding  expression  "unfair  trade"  has  an  acknowl- 
edged and  well-rounded  significance  in  Patent  and  Copyright 
Law,  and  under  that  system  of  rulings  which  now  protects  the  use 
of  Trade-marks  and  Trade  Names ;  and  the  leading  cases  consti- 
tuting or  explaining  that  doctrine  will  be  found  already  set  forth 
herein,  in  Chapters  XV  and  XVI. 

This  system  of  interpretations  and  constructions  may  be 
turned  to  convenient  and  useful  account  when  exploring  and 
mapping  out  the  territory  which  Congress,  in  response  to  a  pub- 
lic demand,  has  seen  fit  to  assign  to  the  Federal  Trade  Commis- 
sion for  its  particular  jurisdiction  and  province. 

Natural  Divisions  of  Topic. — Matters  connected  with  abuses 
of  corporate  control  fall  naturally  under  two  heads ;  and  we  shall 
undertake  for  our  immediate  consideration : 

x.  UNFAIR  MANIPULATION  AND  CONDUCT  IN  MAN- 
AGEMENT OF  AND  DEALINGS  WITH  CORPORATIONS. 

Similar  Principle  Educed  in  Corporation  Law. — The  duty 
of  overseeing  and  codifying  correct  methods  of  business  pro- 

222 


ABUSES  OF  CORPORATE  CONTROL.  223 

cedure  should  and  we  believe  will  to  a  considerable  degree  be  as- 
sisted and  simplified  by  reference  to  a  similar  line  of  cases  con- 
struing and  defining  "unfair  dealings,"  contained  in  corporation 
law.  Certainly  in  a  jurisdiction  which  extends  throughout  the 
confines  of  the  United  States  and  its  various  possessions  and 
dependencies  and  even  reaches  to  "commerce  *  *  *  with 
foreign  nations"  (Clayton  Law,  Section  I,  paragraph  2),  no 
source  of  enlightening  and  useful  information  should  be  passed 
by  or  withheld. 

The  class  of  cases  now  referred  to  and  considered  offer  de- 
cisions of  greater  antiquity  than  those  comprised  in  Patent  and 
Copyright  law  and  possess  at  least  equal  authority  as  prec- 
edents for  the  Commission's  guidance;  they  bear  directly  upon 
the  subject  in  hand  and  express  disapproval  of  "unfair"  acts 
when  these  occur  in  connection  with  the  affairs  of  incorporated 
bodies. 

Definite  Rule  of  Conduct  Established. — In  brief,  this  line  of 
leading  cases  has  established  a  definite  rule  of  conduct  that  is  en- 
forced whenever  similar  situations  are  discovered  in  connection 
with  the  management  of  corporations. 

Instances  Where  Rule  was  Applied. — Thus,  sale  of  corporate 
property  to  pay  the  claim  of  a  director,  where  the  debt  was  oc- 
casioned by  the  mismanagement  of  the  Board,  is  open  to  objec- 
tion, and  such  action  will  be  restrained;1  again,  authority  to  sell 
the  lands  of  the  corporation  does  not  make  legal  or  permit  a  sale 
to  the  wife  of  a  director  exercising  such  power,  unless  the  con- 
sideration represents  the  full  value.2  Where  a  director  bought 
the  assets  of  his  company  for  a  small  price  at  sheriff's  sale,  he 
is  chargeable  with  the  profit ;  and  a  court  of  equity  will  require 
him  to  account  for  this  profit  and  return  such  sum  to  the  treas- 
ury of  the  company.3 

Rule  Applies  Where  Actual  Injury  Shown. — These  cases  are 
fairly  illustrative  of  "unfair  dealings"  which  if  not  unlawful  per 
se,  at  least  are  voidable  upon  the  complaint  of  a  creditor  or  fel- 
low shareholder.  Some  injury,  of  course,  must  be  shown  to 
remove  the  case  from  the  regions  of  mere  theory  and  debate,  or 
of  objection  on  the  part  of  a  volunteer  in  the  transaction;  but 

1  Crescent  City  Brewing  Co.  v.  Planner,  44  L,a.  Ann.  22 ;   10  South.  384. 

2  Green  v.  Hugo,  81  Tex.  452;    17  S.  W.  79;  26  Am.  St.  824. 

3  Tobin  Canning  Co.  v.  Frazer,  81  Tex.  407,  17  S.  W.  25. 


224  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

from  the  multitude  of  adjudicated  cases  there  has  developed  a 
line  of  decisions  which  constitute  a  distinct  department  of  equity 
jurisprudence  and  make  for  fair  dealings  within  the  confines  of 
corporate  management  and  control. 

"Minority  Stockholder's  Rights"  Explained. — This  subject 
is  known  and  treated  of  in  the  text  books  under  the  title  "Minor- 
ity Stockholder's  Rights,"  for  the  reason  that  acts  of  this  descrip- 
tion almost  invariably  arise  from  abuse  of  power  on  the  part  of 
the  controlling  majority,  or  of  their  representatives — the  officers 
or  directors  who  manage  the  affairs  and  business  of  the  corpora- 
tion. A  proper  measure  of  authority,  of  course,  is  an  incident 
and  prime  necessity  in  the  management  of  every  incorporated 
body ;  it  is  only  the  abuse  of  power  which  can  be  made  the  sub- 
ject of  just  complaint. 

Application  is  Reasonable. — That  the  rules  of  proper  behav- 
ior in  such  matters  are  not  unreasonable  is  instanced  by  the  fact 
that  stockholders  may  deal  together  regardless  of  whether  a 
director  is  concerned  in  the  transaction,  if  there  is  no  actual  mis- 
leading ;  and  other  stockholders  cannot  be  heard  to  complain  be- 
cause such  official  position  has  clothed  one  of  the  parties  with 
superior  knowledge.4 

Unfair  Management  of  Corporation. — Instances  of  unfair 
conduct  in  corporate  management  are  so  largely  matters 
of  common  knowledge  that  it  will  not  be  necessary  to  multiply 
examples,  except  to  the  extent  necessary  to  deduce  the  rule  re- 
sulting therefrom,  in  order  that  the  instances  cited  may  be  em- 
ployed in  explaining  or  construing  similar  situations  as  and  when 
they  arise  in  connection  with  proceedings  before  the  Federal 
Trade  Commission. 

Cases  Illustrating  Rule. — An  agreement  to  pay  a  salary  to 
the  manager  on  condition  that  he  shall  buy  stock,  which  the  di- 
rectors in  turn  engage  to  buy  back  from  him  at  an  advance,  has 
been  held  voidable  at  the  instance  of  a  protesting  stockholder, 
since  directors  have  no  authority  in  law  to  make  a  contract  to 
give  one  stockholder  a  preference  over  another  of  the  same 
class;  even  proof  of  good  faith  will  not  legalize  such  methods.5 
Where  a  director  serves  upon  two  boards,  and  there  are  joint 

4  Haarstick  v.  Fox,  9  Utah  no,  33  Pac.  351,  156  U.  S.  674;   Mclntire  v. 
Ajax  Mining  Co.,  17  Utah  213,  20  id.  323,  28  id.  162,  77  Pac.  613. 

5  Wilbur  v.  Stopel,  82  Mich.  344,  46  N.  W.  724,  21  Am.  St.  568. 


ABUSES  OF  CORPORATE  CONTROL.  225 

dealings  between  the  companies,  he  is  prohibited  from  persuad- 
ing either  company  to  enter  upon  contracts  where  his  personal 
interests  would  run  counter  to  those  of  the  corporation.  Only 
confirmation  by  the  stockholders,  with  full  knowledge,  and  the 
absence  of  any  impairment  of  the  rights  of  creditors  will  legiti- 
matize the  transaction  and  overcome  the  presumption  that  some 
unfair  advantage  has  occurred.8 

Standard  of  Fair  Dealing  Maintained. — In  so  far  as  acts  of 
this  general  description  are  the  outcome  of  the  fiduciary  relation- 
ship growing  out  of  the  trust  imposed  in  the  governing  board, 
decisions  by  the  courts  of  highest  authority  insist  upon  a  stan- 
dard of  fair  dealing;  indeed,  a  disinterested  board  is  esteemed 
so  necessary  to  the  orderly  and  proper  administration  of  the  af- 
fairs of  the  company  that  in  a  case  where  a  director  who  was  re- 
ceivng  a  profit  from  the  particular  transaction  was  conclusively 
shown  to  be  in  possession  of  the  deciding  vote,  the  resultant  con- 
tract was  adjudged  unfair  and  set  aside.7 

Great  Variety  of  Unfair  Means. — Such  methods  are  semi- 
fraudulent  in  their  nature,  and  certainly  resemble  and  perhaps 
equal  fully  matured  frauds  in  one  respect,  viz.:  their  form 
and  variety  is  endless,  limited  only  by  ingenuity  of  the  human 
mind.  That  there  exists  a  legion  of  these  nefarious  schemes  has 
been  shown  at  another  place, — Chapter  XVI,  pages  215,  218-9. 

Offices  Exclusive  Property  of  Corporation. — Instances  have 
occurred  where  the  executive  officers  have  been  shown  to  be 
likewise  remiss  in  their  dealings  with  the  corporation.  In  a 
leading  case  it  appeared  that  the  president  had  received  a  sum 
of  money  for  surrendering  his  office  and  contriving  by  his  in- 
fluence to  secure  the  election  of  an  agreed  successor.  A  cor- 
poration entrusted  to  the  protection  and  guidance  of  officials  of 
this  description  naturally  fell  away,  and  its  affairs  at  length  came 
into  the  hands  of  a  receiver. 

In  an  action  for  restitution  it  was  held  such  conduct  constitut- 
ed unfairness  in  an  aggravated  form;  that  the  offices  are  the 
exclusive  property  of  the  corporation  and  no  person  will  be  per- 
mitted to  transform  them  into  personal  gain;  that  defendant's 

6  Langan  v.  Francklyn,  29  Abb.  N.  C.  (N.  Y.)  102;  McGourk.ey  v.  To- 
ledo &  O.  C.  Ry.  Co.,  146  U.  S.  536;   Jacobus  v.  Am.  Min.  Water  Mch. 
Co.,  38  Mise  (N.  Y.)  371 ;  77  N.  Y.  Supp.  898. 

7  Higgins  v.  Lansingh,  154  111.  301,  40  N.  E.  362;  Gildersleeve  v.  Lester, 
68  Hun  (N.  Y.)  532. 

IS 


226  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

act  was  a  perversion  of  the  powers  of  office  and  a  fraud  upon 
the  corporate  body ;  and  the  court  in  accordance  with  those  find- 
ings set  aside  the  corrupt  transaction  and  decreed  that  the  sum 
involved — three  thousand  dollars — should  be  paid  into  the  treas- 
ury of  the  corporation.8 

Manipulation  of  Joint  Control. — Manipulation  of  the  control 
of  one  corporation  so  as  to  enable  a  rival  concern  to  acquire  the 
remaining  shares  at  an  inadequate  price;9  and  the  bringing  of 
needless  suits  to  waste  the  company's  assets  and  destroy  its  busi- 
ness,— are  other  illustrations  of  the  same  unregenerate  type  of 
dealings  in  corporate  affairs  ;10  although  it  should  be  noted  that 
in  cases  of  this  sort  it  is  the  manipulation  of  the  combined  man- 
agement and  stock-control  rather  than  any  individual  act  which 
constitutes  the  instigation  and  carrying  through  of  the  illicit 
scheme. 

Redress  through  Court  of  Equity. — The  means  of  prevent- 
ing or  overcoming  such  acts  has  been  in  most  instances  a  rep- 
resentative action  in  equity,  brought  by  a  minority  stockholder 
on  behalf  of  himself  and  the  other  owners  of  shares  who  may  be 
similarly  situated.  The  action,  in  theory  of  law,  is  brought  by 
or  for  the  corporation;  but  in  practice  it  is  usual  to  make  the 
corporation  a  party  defendant,  as  otherwise  it  would  be  nec- 
essary to  engage  the  services,  or  at  least  the  co-operation  of  the 
officials  concerned  in  the  transaction,  upon  which  the  charge  is 
based, — a  course  which  would  be  manifestly  absurd.  The  bene- 
fits of  the  litigation  accrue  to  the  corporation ;  although  the  mov- 
ing parties  may  be  allowed  to  retain  the  expenses  of  counsel  and 
ether  necessary  outlays,  in  a  proper  case. 

Results  not  Ideal,  though  often  Effectual. — It  must  be  ad- 
mitted that  this  plan  of  procedure  is  not  ideal.  There  is  some- 
thing approaching  an  anti-climax  in  the  wording  of  a  decree  re- 
quiring that  restitution  be  made  by  depositing  a  fund  in  the  treas- 
ury of  the  corporation,  when  it  is  certain  the  major  portion  will 
in  due  course  find  its  way  back  into  the  pockets  of  the  guilty  con- 
trol. However,  knowledge  that  a  court  will  or  may  scrutinize  the 
guilty  transaction,  and  the  possibility  of  publicity  which  will 

8  McClure  v.  Law,  161  N.  Y.  78,  55  N.  E.  388,  76  Am.  St.  262. 

9  Farmers'  Loan  &  Trust  Co.  v.  Trustees  of  N.  Y.  &  West.  R.  R.  Co.,  150 
N.  Y.  410,  44  N.  E.  1043,  34  L.  R.  A.  76,  55  Am.  St.  689 ;  Macklem  v.  Fales, 
130  Mich.  66. 

10  George  v.  Central  R,  R.  Co.,  101  Ala.  607,  14  South.  752. 


ABUSES  OF  CORPORATE  CONTROL.  227 

beget  public  disapproval  and  contempt, — are  powerful  deterrents, 
even  though  it  may  sometimes  happen  there  are  persons  con- 
cerned who  will  not  respond  to  such  restraining  influences  when 
opportunities  for  spoliation  occur.  In  brief,  the  rights  of  the 
creditor  and  the  minority  stockholder  occupy  a  distinct  and  well 
recognized  place  within  the  precincts  of  corporation  law  and  fix 
boundaries  beyond  which  it  is  unsafe  for  officers  and  others  to 
carry  on  a  designing  scheme  or  predatory  campaign. 

Commission's  Jurisdiction  Prescribed  by  Statute. — It  does 
not  seem  likely  the  Commission  at  present  will  include  general 
traffic  in  corporate  shares  for  voting  purposes  or  other  matters 
affecting  the  internal  workings  of  the  company  as  coming  within 
its  province  and  particular  zone  of  influence ;  its  interpretation  of 
acts  included  in  the  term  "unfair  methods  of  competition  in  com- 
merce" (unless  these  acts  are  specifically  pointed  out  by  statute), 
can  hardly  be  thus  broad,  however  repugnant  such  conduct  may 
appear  to  every  person  endowed  with  an  open  mind  and  moved 
by  proper  motives. 

Has  Power  to  Require  Reports. — However  that  may  be,  there 
exist  very  wide  powers  to  institute  enquiries  and  to  demand  re- 
ports, general  or  special,  under  Section  6  of  the  creating  act; 
and  it  may  well  be  that  the  collating  of  the  information  thus  ob- 
tained by  the  Commission  and  the  publication  thereof  (in  its 
discretion),  will  act  as  a  sufficient  check  upon  abuses  of  the  con- 
trol, thereby  serving  a  useful  purpose  in  ordinary  cases  of  incip- 
ient attacks  upon  the  property  or  interests  of  the  common  ven- 
ture. In  this  event,  a  distinct  and  gratifying  advance  will  have 
been  accomplished  without  the  necessity  for  restraining  orders  or 
other  steps  and  proceedings  directed  to  that  end. 

Commission  May  Recommend  Additional  Legislation. — But 
Congress  has  not  shut  the  door  of  further  legislation  in  case 
hardened  offenders  prove  recalcitrant  and  refuse  to  recognize  the 
handwriting  upon  the  wall;  for  it  requires  the  Commission, 
among  its  other  duties,  to  submit  to  the  legislating  body  "recom- 
mendations for  further  legislation"  (Federal  Trade  Commission 
Act,  Section  6,  paragraph  "f"),  whenever  that  board  finds  the 
situation  demands  an  increase  of  power  to  fully  occupy  its  field 
and  to  bring  about  results  in  the  public  interest. 

Corporation  Decisions  Useful  Guide. — In  the  meanwhile  and 
until  Congress  shall  find  it  necessary  to  be  its  own  interpreter  by 
further  supplementing  of  the  Anti-trust  laws,  it  is  believed  that  the 


228  MANUAL,  OF  FEDERAL  TRADE  COMMISSION. 

foregoing  decisions  in  corporation  cases  taken  together  constitute 
a  useful  guide  and  criterion  whenever  allegations  of  "unfair" 
dealings  are  filed  with  the  Federal  Trade  Commission  for  adju- 
dication. Some  method  of  standardizing  rulings  is  especially 
needed  in  a  jurisdiction  so  wide  and  varied  as  that  which  Congress 
has  conferred  upon  this  semi-judicial  body;  and  experience  may 
show  that  something  worth  while  has  been  accomplished  when  one 
means  of  attaining  that  result  has  been  pointed  out. 

II. 
a.  UNFAIR  RESTRAINT  OF  VOTING  POWER. 

A  Beneficial  Result. — Although  Section  7  of  the  Clayton  Law 
bases  its  various  prohibitions  of  stock-ownership  in  competing 
companies  upon  the  dangers  of  restraints  of  trade  and  monopolies, 
the  effect  is  likely  to  prove  even  more  beneficial  to  general  busi- 
ness interests  by  completing  the  destruction  of  that  ingenious  de- 
vice known  as  the  holding  company. 

Early  Method  of  Securing  Corporate  Control. — In  former 
times  the  control  of  a  corporation  for  ulterior  purposes  was  ob- 
tained through  manipulations  whereby  an  "inner  ring"  obtained 
possession  of  its  directorate  and  thenceforth  divided  among  them- 
selves the  resultant  profits  and  emoluments,  except  as  restrained 
through  courts  of  equity  in  long  and  expensive  litigations  that 
were  necessarily  uncertain  because  of  difficulty  in  gaining  access 
to  the  books,  documents  and  papers  requisite  to  prove  the  cor- 
porate fraud.  The  entire  procedure  in  suits  of  that  description 
was  cumbersome  from  the  inception  to  the  finish;  although  at 
times  adequate  relief  has  been  secured  therein,  as  appears  by  ref- 
erence to  quite  numerous  decisions  in  the  reports  of  the  equity 
courts. 

Substitution  of  Holding  Company  Device. — Subsequently 
there  flourished  a  new  scheme  whereby  the  control  was  perma- 
nently transferred  to  a  holding  company,  which  might  become  the 
repository  of  a  series  of  stock-controls  extending  throughout  the 
United  States  and  even  abroad ;  and  control  of  the  holding  com- 
pany insured  the  control  of  all. 

Ignoring  Constitution,  Device  Excludes  Minority. — From 
the  viewpoint  of  the  ingenious  manipulator  this  plan  was  a  de- 
cided improvement  where  combinations  and  consolidations  were 
desired,  and  altogether  it  marked  a  distinct  advance  in  such  prac- 


ABUSES  OF  CORPORATE  CONTROL.  229 

tices ;  by  it  the  voting  power  of  the  minority  was  reduced  to  an 
impotent  and  ignorable  factor  notwithstanding  such  course  contra- 
vened rights  which  the  Constitution  was  calculated  to  secure  to 
every  citizen.  As  far  back  as  the  time  of  Chief  Justice  Marshall 
it  was  decided  in  the  Dartmouth  College  case11  that  a  charter  is 
a  contract  and  that  by  the  principle  so  established  those  engaged 
therein  possess  vested  rights.  Again,  every  jurisdiction  provides 
means  for  the  dissolution  of  corporations  when  their  use  or  con- 
venience as  an  independent  and  separate  body  corporate  has 
ceased,  and  some  other  corporation  or  concern  can  conduct  its 
affairs  to  greater  advantage.  To  proceed  otherwise  is  to  confis- 
cate the  property  of  the  dissenting  minority  "without  due  process 
of  law," — a  method  of  taking  private  property  which  is  prohibited 
by  the  Fifth  Amendment. 

By  shifting  the  permanent  control  to  a  holding  company,  how- 
ever, a  new  situation  was  created  where  each  corporation  so 
taken  over  parted  with  the  management  of  its  policy  and  busi- 
ness and  virtual  dissolution  was  effected  without  that  distri- 
bution of  assets  a  statutory  dissolution  necessarily  requires.  It 
follows  that  the  "obligation  of  contracts"  between  the  corpora- 
tion and  such  of  its  stockholders  as  composed  the  minority  was 
as  seriously  impaired  as  if  the  respective  legislatures  had  deprived 
each  of  them  of  their  voting  power  and  right  to  require  a  division 
of  the  corporation's  assets,  from  the  date  when  the  transfer  of 
control  was  effectuated  in  binding  form. 

Constitutional  Provision  Violated. — Such  conduct  certainly 
contravenes  the  rights  which  the  stockholder  secured  under 
the  doctrine  contained  in  the  spirit  if  not  in  the  words  of  the 
Dartmouth  College  case — rights  which,  once  vested,  became 
property  that  the  Fifth  Amendment  assures  him  shall  not  be 
taken  away  "without  due  process  of  law."  Both  in  his  right  to 
possess  and  retain  his  pro  tanto  share  in  conducting  the  affairs 
of  the  organization  and  in  his  right  to  a  distributive  share  in  the 
assets  of  his  corporation  whenever  it  shall  be  in  fact  or  in  effect 
dissolved,  the  minority  stockholder  is  injured  by  the  operation 
of  the  holding  company  plan ;  and  this  by  a  mere  colorable  trans- 
fer of  stock-control,  tmsafeguarded  or  legitimitized  by  any  pro- 
ceedings beyond  the  mere  act  of  interested  persons  and  subse- 

ii  Dartmouth  College  v.  Woodward,  4  Wheat.  (17  U.  S.)  518-636;  4  I* 
Ed.  629. 


230  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

quent  ratification  at  meetings  of  the  stockholders  of  the  corpora- 
tions— both  dominated  by  the  persons  interested  in  consum- 
mating the  deal. 

Holding  Company  Creates  Monopoly  of  Voting  Power. — 
While  such  acts  as  these  may  not  constitute  a  situation  where  "the 
effect  of  such  acquisition  or  the  u&e  of  such  stock  by  the  voting 
*  *  *  may  be  to  *  *  *  create  a  monopoly  of  any  line  of 
commerce"  (Clayton  Bill,  Section  7,  paragraph  2),  it  is  certain 
beyond  the  realms  of  dispute  that  their  effect  is  to  create  a  per- 
manent monopoly  of  the  voting  power,  and  it  is  equally  certain 
these  acts  can  never  stand  the  test  of  scrutiny  by  courtstif  equity, 
whenever  the  question  is  squarely  presented  for  consideration  in 
those  tribunals. 

Adverse  Effects. — Complaisant  legislatures,  attracted  by  the 
certainty  of  special  taxes  paid  in  consideration  for  special  priv- 
ileges, enacted  corporation  laws  of  extraordinary  latitude;  and 
the  holding  company  continued  a  favorite  expedient  in  circles  of 
high  finance  until  the  decision  in  the  Northern  Securities  case12 
swept  away  the  foundation  upon  which  the  whole  structure  was 
based. 

Means  of  Relief  Indicated. — At  a  time  when  this  corporate 
expedient  flourished,  its  harmful  nature  was  discussed  and  its 
decline  and  fall  predicted : 

"Regarding  the  form  of  the  relief  against  the  situation, 
it  is  probable  that  it  will  appear  either  by  way  of  legisla- 
tion confirmatory  of  constitutional  provisions  and  carry- 
ing into  effect  their  intent  by  specific  delimitation  of  the 
right  of  the  majority  to  convey  and  vest  in  a  'holding  com- 
pany' the  corporate  control ;  or  that  courts  of  equity  will 
exercise  their  inherent  powers  in  the  premises,  and  cure 
this  species  of  injustice  by  restrictive  decisions  aimed  at 
the  evil  [control  of  voting  power]  alluded  to  above.  Cer- 
tainly relief  will  appear  in  one  or  the  other  of  these  forms, 
and  it  does  not  particularly  concern  the  public  by  which 
road  it  arrives,  so  long  as  the  cure  is  speedy  and  perma- 
nent." 18 

12  Northern  Securities  Co.  v.  U.  S.,  193  U.  S.  107,  24  Sup.  Ct.  436,  48  L. 
Ed.  679  affirming  120  Fed.  721. 

13  Harvey,  Handbook  of  Corporation  Law,  p.  468. 


ABUSES  OF  CORPORATE  CONTROL.  23: 

Public  Interests  Advanced  by  Supplemental  Anti-Trust 
Laws. — The  cure,  even  if  it  has  not  been  speedy,  promises  to  be 
permanent.  The  visitorial  powers  conferred  upon  the  Federal 
Trade  Commission  by  the  creating  statute,  together  with  the  fur- 
ther provisions  prohibiting  stock  ownership  in  competing  corpora- 
tions with  or  without  the  employment  of  the  holding  company  as 
an  intermediary — when  considered  in  connection  with  the  inter- 
diction of  interlocking  directorates  and  the  other  restraining 
features  of  the  Clayton  Law — foretell  the  complete  demolition  of 
the  holding  company  device.  This  new  standard  of  corporate 
methods  and  management  does  not  contravene  but  on  the  contrary 
assists  in  rendering  operative  the  principle  of  business  dealing  laid 
down  by  the  Supreme  Court  in  the  Standard  Oil  Case14:  "The 
honest  exertion  of  one's  right  to  contract  for  his  own  benefit,  un- 
accompanied by  a  wrongful  motive  to  injure  others." 

Code  of  Business  Procedure  Assured. — In  a  quarter  that  so 
deeply  concerns  public  interests  it  is  well  the  supreme  legislative 
authority  has  exercised  its  power  by  making  a  beginning  in  the 
establishment  of  a  code  of  procedure  for  business  dealings.  It  is 
now  possible  for  the  nation  to  adjust  its  commercial  energies  to 
conform  with  the  system  comprised  within  this  new  code  of  busi- 
ness procedure  and  to  proceed  along  conservative  and  permanent 
lines,  when  once  that  system  has  been  understood  and  di- 
gested by  the  public  mind. 

"Equality  under  the  law"  is  a  motto  that  inspires  public 
confidence  and  in  the  end  is  productive  of  permanent  bene- 
fits to  every  legitimate  interest.  The  Anti-trust  laws — altered, 
modified  and  to  a  certain  degree  softened  and  rendered  more 
workable  by  recent  enactments — should  and  we  believe  will 
bring  about  that  result.  Measures  intended  to  prevent  abuses  of 
control,  joined  with  similar  restraining  influences  in  other  de- 
partments of  corporate  and  business  affairs,  must  establish  condi- 
tions that  will  conduce  to  conservative  growth,  and  this  in  turn 
should  win  the  approval  and  confidence  of  investors, — a  situation 
which  gives  promise  of  general  progress  to  a  degree  that  unfair 
practices  could  never  accomplish. 

14  Standard  Oil  Co.  v.  United  States,  221  U.  S.  I ;  31  Sup.  Ct.  502; 
55  L.  Ed.  619;  34  L.  R.  A.  (N.  S.)  834. 


FEDERAL  TRADE  COMMISSION.' 


JOSEPH  E.  DAVIES,  Chairman 
EDWARD  N.  HURLEY,  Vice  Chairman 
WILLIAM  J.  HARRIS 
WILL  H.  PARRY 
GEORGE  RUBLES 


FRANK  JONES, 

Acting  Secretary. 

RULES  OF  PRACTICE  BEFORE  THE  COMMISSION. 

I.  SESSIONS. 

The  principal  office  of  the  commission  at  Washington,  D.  C.,  is  open 
each  business  day  from  9  a.  m.  to  4 : 30  p.  m.  The  commission  may  meet 
and  exercise  all  its  powers  at  any  other  place,  and  may,  by  one  or  more 
of  its  members,  or  by  such  examiners  as  it  may  designate,  prosecute  any 
inquiry  necessary  to  its  duties  in  any  part  of  the  United  States. 

Sessions  of  the  commission  for  hearing  contested  proceedings  will  be 
held  as  ordered  by  the  commission. 

Sessions  of  the  commission  for  the  purpose  of  making  orders  and  for 
the  transaction  of  other  business,  unless  otherwise  ordered,  will  be  held 
at  the  office  of  the  commission  at  Washington,  D.  C.,  on  each  business 
day  at  10 : 30  a.  m.  Three  members  of  the  commission  shall  constitute 
a  quorum  for  the  transaction  of  business. 

All  orders  of  the  commission  shall  be  signed  by  the  secretary. 

II.  COMPLAINTS. 

Any  person,  partnership,  corporation,  or  association  may  apply  to  the 
commission  to  institute  a  proceeding  in  respect  to  any  violation  of  law 
over  which  the  commission  has  jurisdiction. 

Such  application  shall  be  in  writing,  signed  by  or  in  behalf  of  the  appli- 
cant, and  shall  contain  a  short  and  simple  statement  of  the  facts  consti- 
tuting the  alleged  violation  of  law  and  the  name  and  address  of  the  appli- 
cant and  of  the  party  complained  of. 

The  commission  shall  investigate  the  matters  complained  of  in  such  ap- 
plication, and  if  upon  investigation  it  shall  appear  to  the  commission  that 
there  is  a  violation  of  law  over  which  the  commission  has  jurisdiction,  the 
commission  shall  issue  and  serve  upon  the  party  complained  of  a  complaint 
stating  its  charges  and  containing  a  notice  of  a  hearing  upon  a  day  and  at 
a  place  therein  fixed  at  least  forty  days  after  the  service  of  said  complaint. 

III.  ANSWERS. 

Within  thirty  days  from  the  service  of  the  complaint,  unless  such  time 
be  extended  by  order  of  the  commission,  the  defendant  shall  file  with 
the  commission  an  answer  to  the  complaint.  Such  answer  shall  con- 
tain a  short  and  simple  statement  of  the  facts  which  constitute  the  ground 
of  defense.  It  shall  specifically  admit  or  deny  or  explain  each  of  the 
facts  alleged  in  the  complaint,  unless  the  defendant  is  without  knowl- 
edge, in  which  case  he  shall  so  state,  such  statement  operating  as  a  denial. 

I.  For  membership  of  the  other  statutory  bodies  having  jurisdictional 
powers  under  the  provisions  of  the  Clayton  Law,  viz.,  the  Interstate  Com- 
merce Commission  and  the  Federal  Reserve  Board, — see  page  235. 

232 


RULES  OF  PRACTICE.  233 

Answers  in  typewriting  must  be  on  one  side  of  the  paper  only,  on  paper 
not  more  than  8^2  inches  wide  and  not  more  than  n  inches  long,  and 
weighing  not  less  than  16  pounds  to  the  ream,  folio  base,  17  by  22  inches, 
with  left-hand  margin  not  less  than  il/2  inches  wide,  or  they  may  be 
printed  in  10  or  12  point  type  on  good  unglazed  paper  8  inches  wide  by 
10^3  inches  long,  with  inside  margins  not  less  than  i  inch  wide. 

IV.  SERVICE. 

Complaints,  orders,  and  other  processes  of  the  commission  may  be 
served  by  anyone  duly  authorized  by  the  commission,  either  (a)  by  de- 
livering a  copy  thereof  to  the  person  to  be  served,  or  to  a  member  of  the 
partnership  to  be  served,  or  to  the  president,  secretary,  or  other  executive 
officer,  or  a  director,  of  the  corporation  or  association  to  be  served ;  or 
(b)  by  leaving  a  copy  thereof  at  the  principal  office  or  place  of  business 
of  such  person,  partnership,  corporation,  or  association;  or  (c)  by  regis- 
tering and  mailing  a  copy  thereof  addressed  to  such  person,  partnership, 
corporation,  or  association  at  his  or  its  principal  office  or  place  of  busi- 
ness. The  verified  return  by  the  person  so  serving  said  complaint,  order 
or  other  process,  setting  forth  the  manner  of  said  service,  shall  be  proof 
of  the  same,  and  the  return  post-office  receipt  for  said  complaint,  order, 
or  other  process,  registered  and  mailed  as  aforesaid,  shall  be  proof  of 
the  service  of  the  same. 

V.  INTERVENTION. 

Any  person,  partnership,  corporation,  or  association  desiring  to  inter- 
vene in  a  contested  proceeding  shall  make  application  in  writing,  setting 
out  the  grounds  on  which  he  or  it  claims  to  be  interested.  The  commis- 
sion may,  by  order,  permit  intervention  by  counsel  or  in  person  to  such 
extent  and  upon  such  terms  as  it  shall  deem  just. 

Applications  to  intervene  must  be  on  one  side  of  the  paper  only,  on 
paper  not  more  than  8J^  inches  wide  and  not  more  than  n  inches  long, 
and  weighing  not  less  than  16  pounds  to  the  ream,  folio  base,  17  by  22 
inches,  with  left-hand  margin  not  less  than  i%  inches  wide,  or  they  may 
be  printed  in  10  or  12  point  type  on  good  unglazed  paper  8  inches  wide 
by  10^2  inches  long,  with  inside  margins  not  less  than  i  inch  wide. 

VI.  CONTINUANCES  AND  EXTENSIONS  OF  TIME. 

Continuances  and  extensions  of  time  will  be  granted  at  the  discretion 
of  the  commission. 

VII.  WITNESSES  AND  SUBPOENAS. 

Witnesses  shall  be  examined  orally,  except  that  for  good  and  exceptional 
cause  for  departing  from  the  general  rule  the  commission  may  permit 
their  testimony  to  be  taken  by  deposition. 

Subpoenas  requiring  the  attendance  of  witnesses  from  any  place  in  the 
United  States  at  any  designated  place  of  hearing  may  be  issued  by  any 
member  of  the  commission. 

Subpoenas  for  the  production  of  documentary  evidence  (unless  directed 
to  issue  by  a  commissioner  upon  his  own  motion)  will  issue  only  upon 
application  in  writing,  which  must  be  verified  and  must  specify,  as  near 
as  may  be,  the  documents  desired  and  the  facts  to  be  proved  by  them. 

Witnesses  summoned  before  the  commission  shall  be  paid  the  same  fees 
and  mileage  that  are  paid  witnesses  in  the  courts  of  the  United  States, 
and  witnesses  whose  depositions  are  taken,  and  the  persons  taking  the 
same,  shall  severally  be  entitled  to  the  same  fees  as  are  paid  for  like 
services  in  the  courts  of  the  United  States. 

VIII.  DEPOSITIONS  IN  CONTESTED  PROCEEDINGS. 

The  commission  may  order  testimony  to  be  taken  by  deposition  in  a  con- 
tested proceeding. 


234  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

Depositions  may  be  taken  before  any  person  designated  by  the  com- 
mission and  having  power  to  administer  oaths. 

Any  party  desiring  to  take  the  deposition  of  a  witness  shall  make  appli- 
cation in  writing,  setting  out  the  reasons  why  such  deposition  should 
be  taken,  and  stating  the  time  when,  the  place  where,  and  the  name  and 
post-office  address  of  the  person  before  whom  it  is  desired  the  deposi- 
tion be  taken,  the  name  and  post-office  address  of  the  witness,  and  the 
subject  matter  or  matters  concerning  which  the  witness  is  expected  to 
testify.  If  good  cause  be  shown,  the  commission  will  make  and  serve 
upon  the  parties,  or  their  attorneys,  an  order  wherein  the  commission 
shall  name  the  witness  whose  deposition  is  to  be  taken  and  specify  the 
time  when,  the  place  where,  and  the  person  before  whom  the  witness  is  to 
testify,  but  such  time  and  place,  and  the  person  before  whom  the  deposi- 
tion is  to  be  taken,  so  specified  in  the  commission's  order,  may  or  may  not 
be  the  same  as  those  named  in  said  application  to  the  commission. 

The  testimony  of  the  witness  shall  be  reduced  to  writing  by  the  officer 
before  whom  the  deposition  is  taken,  or  under  his  direction,  after  which 
the  deposition  shall  be  subscribed  by  the  witness  and  certified  in  usual 
form  by  the  officer.  After  the  deposition  has  been  so  certified  it  shall, 
together  with  a  copy  thereof  made  by  such  officer  or  under  his  direction, 
be  forwarded  by  such  officer  under  seal  in  an  envelope  addressed  to  the 
commission  at  its  office  in  Washington,  D.  C.  Upon  receipt  of  the  deposi- 
tion and  copy  the  commission  shall  file  in  the  record  in  said  proceedings 
such  deposition  and  forward  the  copy  to  the  defendant  or  the  defendant's 
attorney. 

Such  depositions  shall  be  typewritten  on  one  side  only  of  the  paper, 
which  shall  be  not  more  than  8%  inches  wide  and  not  more  than  n  inches 
long  and  weighing  not  less  than  16  pounds  to  the  ream,  folio  base,  17  by 
22  inches,  with  left-hand  margin  not  less  than  il/2  inches  wide. 

No  deposition  shall  be  taken  except  after  at  least  six  days'  notice  to 
the  parties,  and  where  the  deposition  is  taken  in  a  foreign  country  such 
notice  shall  be  at  least  fifteen  days. 

No  deposition  shall  be  taken  either  before  the  proceeding  is  at  issue, 
or,  unless  under  special  circumstances  and  for  good  cause  shown,  within 
ten  days  prior  to  the  date  of  the  hearing  thereof  assigned  by  the  com- 
mission, and  where  the  deposition  is  taken  in  a  foreign  country  it  shall 
not  be  taken  after  thirty  days  prior  to  such  date  of  hearing. 

IX.  DOCUMENTARY  EVIDENCE. 

Where  relevant  and  material  matter  offered  in  evidence  is  embraced  in 
a  document  containing  other  matter  not  material  or  relevant  and  not  in- 
tended to  be  put  in  evidence,  such  document  will  not  be  filed,  but  a  copy 
only  of  such  relevant  and  material  matter  shall  be  filed. 

X.  BRIEFS. 

Unless  otherwise  ordered,  briefs  may  be  filed  at  the  close  of  the  tes- 
timony in  each  contested  proceeding.  The  presiding  commissioner  or 
examiner  shall  fix  the  time  within  which  briefs  shall  be  filed  and  service 
thereof  shall  be  made  upon  the  adverse  parties. 

All  briefs  must  be  filed  with  the  secretary  and  be  accompanied  by  proof  of 
service  upon  the  adverse  parties.  Fifteen  copies  of  each  brief  shall  be 
furnished  for  the  use  of  the  commission,  unless  otherwise  ordered. 

Application  for  extension  of  time  in  which  to  file  any  brief  shall  be 
by  petition  in  writing,  stating  the  facts  upon  which  the  application  rests, 
which  must  be  filed  with  the  commission  at  least  five  days  before  the  time 
for  filing  the  brief. 

Every  brief  shall  contain,  in  the  order  here  stated — 

(1)  A  concise  abstract,  or  statement  of  the  case. 

(2)  A  brief  of  the  argument,  exhibiting  a  clear  statement  of  the  points 
of  fact  or  law  to  be  discussed,  with  the  reference  to  the  pages  of  the 
record  and  the  authorities  relied  upon  in  suppose  of  each  point 


RULES  OF  PRACTICE.  235 

Every  brief  of  more  than  ten  pages  shall  contain  on  its  top  fly  leaves 
a  subject  index  with  page  references,  the  subject  indexed  to  be  supple- 
mented by  a  list  of  all  cases  referred  to,  alphabetically  arranged,  together 
with  references  to  pages  where  the  cases  are  cited. 

Briefs  must  be  printed  in  10  or  12  point  type  on  good  unglazed  paper 
8  inches  by  iol/2  inches,  with  inside  margins  not  less  than  I  inch  wide,  and 
with  double-leaded  text  and  single  leaded  citations. 

Oral  arguments  will  be  had  only  as  ordered  by  the  commission. 

XI.  ADDRESS  OF  THE  COMMISSION. 

All  communications  to  the  commission  must  be  addressed  to  Federal 
Trade  Commission,  Washington,  D.  C.,  unless  otherwise  specifically  di- 
rected. 


MEMBERSHIP  OF  OTHER  BODIES  HAVING  JURIS- 
DICTION IN  CERTAIN  CASES  UNDER  THE 
PROVISIONS  OF  THE  CLAYTON  LAW. 

INTERSTATE  COMMERCE  COMMISSION.1 
C.  C.  McCnoRD,  Chairman. 

Commissioners. 
JUDSON  C.  CLEMENTS. 
EDGAR  E.  CLARK. 
JAMES  S.  HARLAN. 
BALTHASAR  H.  MEYER. 
HENRY  C.  HALL. 
WINTHROP  M.  DANIELS. 


GEORGE  B.  McGiNTY,  Secretary. 


FEDERAL  RESERVE  BOARD. 

CHARLES  S.  HAMLIN,  Governor. 
FREDERICK  A.  DELANO,  Vice  Governor. 
PAUL  M.  WARBURG. 
W.  P.  G.  HARDING. 
ADOLPH  C.  MILLER. 


H.  PARKER  WILLIS,  Secretary. 
I  For  membership  of  Commission,  as  originally  constituted,  see  page  352. 


FORMS.1 

These  forms  are  intended  as  precedents  in  cases  where  they  are  appli- 
cable. Forms  Nos.  1-8  inclusive  may  be  altered  to  suit  the  circumstances 
of  the  individual  case;  the  formalities  prescribed  in  No.  9  demand  strict 
compliance. 

No.  i. 
PETITION  FOR  ISSUANCE  OF  COMPLAINT.* 

FEDERAL  TRADE  COMMISSION. 
IN  THE  MATTER  OF  THE 


a  1 
if] 


n  „  r  PETITION. 
APPLICATION  OF  A.  B 

The  petition  of  the  above-named  applicant  respectfully  shows : 

I.  That   (here  state  name,  occupation,  and  address  of  peti- 
tioner.) 

II.  That  (the  person,  partnership,  corporation,  or  association 
complained  of)  has  engaged  in  unlawful  practices  in  a  matter 
whereof  the  Federal  Trade  Commission  has  jurisdiction,  to  wit: 
(set  forth  here  the  section  or  general  provision  which  petitioner 
believes  has  been  violated;  also  a  short  and  simple  statement  of 
the  facts  constituting  the  alleged  violation  of  law,  with  the  name 
and  address  of  the  party  complained  of.    Continue  numbering 
each  succeeding  paragraph — */  there  are  others — as  in  Nos.  I  and 
II.) 

Wherefore  the  petitioner  prays  that  the  defendant  may  be 
served  with  a  complaint  and  may  be  required  to  answer  the 
charges  herein,  and  that  after  due  hearing  and  investigation  an 
order  may  be  made  commanding  the  defendant  to  cease  and  de- 
sist from  said  violations  of  the  laws  within  the  jurisdiction  of 
this  commission,  and  for  such  other  and  further  order  as  the 
commission  may  deem  necessary  in  the  premises. 

A.  B. 
(Signature  by  or  in  behalf  of  petitioner.) 

1  Form  is  omitted  where  the  practice  requires  that  the  complaint  or 
other  process  shall  be  prepared  and  served  by  the  commission. 

2  See  Section  5  of  Federal  Trade  Commission  Act  and  Section  n  of 
Clayton  Bill;    also  Rule  II  of  Rules  of  Practice.     Notice  of  time  and 
place  of  hearing — at  least  forty  days  after  date  of  service — will  be  con- 
tained in  complaint,  when  issued. 

3  Name  of  person,  partnership,  corporation,  or  association. 

236 


FORMS.  237 

No.  2. 

ANSWER  TO  COMPLAINT.4 

FEDERAL  TRADE  COMMISSION. 
TRADE  COMMISSION  "^ 
AGAINST  >  ANSWER. 

C.  D.5  J 

The  above-named  defendant  for  answer  to  the  complaint  in 
this  proceeding,  respectfully  states — 

I.  That  (here  set  forth  a  short  and  simple  statement  of  the 
facts  which  constitute  the  ground  of  defense.  Each  fact  alleged 
in  the  complaint  must  be  specifically  denied  or  explained,  unless 
the  defendant  is  without  knowledge,  when  he  should  so  state,  and 
such  averment  will  operate  as  a  denial.  Continue  numbering  each 
succeeding  paragraph.) 

Wherefore  the  defendant  prays  that  the  complaint  in  this  pro- 
ceeding be  dismissed. 

B.  C. 
(Signature  by  or  in  behalf  of  defendant.) 

No.  3. 

PROOF  OF  SERVICE.6 

FEDERAL  TRADE  COMMISSION. 
FEDERAL  TRADE  COMMISSION  "^ 

AGAINST  >  AFFIDAVIT  OF  SERVICE. 

C.  D.  J 

STATE  OF ) 

V  ss: 

COUNTY  OF j 

being  duly  sworn,  says : 

That  he  is  more  than  years  of  age,  and  resides  at 

,  and  is  a  person  duly  authorized  by  said 

commission  to  serve  complaints,  orders  and  other  processes ;  that 
on  the day ,  191. .,  at , 

4  Answer  must  be  filed  with  the  commission  within  thirty  days  from 
service  of  complaint,  unless  time  is  extended.    For  general  provisions,  see 
Section  5  of  Federal  Trade  Commission  Act  and  Section  II  of  Clayton 
Bill.    For  practice  and  requirements  as  to  size  of  paper,  etc.,  see  Rule  III. 

5  Name  of  person,  partnership,  corporation,  or  association. 

6  Requirements  of  proof  of  service  are  contained  in  Section  5  of  Fed- 
eral Trade  Commission  Act  and  Section  n  of  Clayton  Bill.    These  regu- 
lations are  re-stated  in  Rule  IV. 


238  MANUAL  OP  FEDERAL  TRADE  COMMISSION. 

he  duly  served  the  annexed  (complaint  or  other  process,  specify- 
ing said  paper}  upon  ,  by  (here  specify 

one  of  the  three  methods  of  service  permitted  by  Rule  IV ;  if 
service  is  by  mail,  attach  return  post-office  receipt.)7 

That  he  knows  the  person  so  served  to  be  (the  complainant, 
defendant,  member  of  partnership,  officer  of  corporation, — or 
otherwise  describe  person  served,  as  occasion  requires). 

Sworn  to  before  me 

this day  of ,  191. .. 


(Signature  of  person  making  service.) 


(Official  signature  of  person  qualified 

to  administer  oath,  with  seal.) 

i 

No.  4. 
PETITION  FOR  PERMISSION  TO  INTERVENE.* 

FEDERAL  TRADE  COMMISSION. 
FEDERAL  TRADE  COMMISSION^ 

AGAINST  >  PETITION. 

C.  D.                    J 
The  petition  of respectfully  shows — 

I.  That  (set  forth  name  and  address  of  petitioner). 

II.  That  there  are  good  and  substantial  reasons  why  the  above- 
named  petitioner  should  be  permitted  to  intervene  in  this  pro- 
ceeding, as  will  appear  from  the  following  facts:     (Here  state 
interest  which  petitioner  has  in  the  controversy,  with  grounds  for 
permitting  the  incoming  party  to  join  in  the  prosecution  or  de- 
fense.   Each  succeeding  paragraph  should  be  numbered  consecu- 
tively.) 

Wherefore  the  petitioner  prays  that  he  may  be  permitted  to 
intervene  in  the  above-entitled  proceeding. 


(Signature  by  or  in  behalf  of  petitioner.) 

7  The  return  post-office  receipt  is  probably  proof  of  service,  without 
affidavit. 

8  Permission  to  intervene  and  extent  to  which  that  privilege  will  be 
granted,  with  the  terms,  are  discretionary  matters.     See  Section  5  of 
Federal  Trade  Commission  Act,  and  Section  n  of  Clayton  Bill, — also 
Rule  V.    Said  rule  also  regulates  size  of  paper,  etc.,  in  connection  with  the 
application. 


FORMS.  239 


No.  5- 
SUBPOENA." 

FEDERAL  TRADE  COMMISSION. 
To  . 


You  are  hereby  required  to  appear  before 

in  the  matter  now  pending  before  the  Federal  Trade  Commission, 

upon  the  complaint  of  Federal  Trade  Commission  against 

,  as  a  witness  on  the  part  of  

on  the day  of  ,  191 . .,  at  ...  o'clock  in  the 

noon  of  said  day,  at 

And  for  failure  to  attend  and  testify  as  hereby  required  you 
will  be  subject  to  such  proceedings  in  a  District  Court  of  the 
United  States  and  to  such  fines  and  penalties  as  are  set  forth  in 
Sections  9  and  10  of  the  Federal  Trade  Commission  Act,  to 
which  reference  is  hereby  made. 

Dated  . 


(Seal. )  Commissioner. . . 


No.  6. 
SUBPOENA  Ducus  TucuM.10 

FEDERAL  TRADE  COMMISSION. 
To  . 


You  are  hereby  required  to  appear  before 

in  the  matter  now  pending  before  the  Federal  Trade  Commission 
upon  the  complaint  of  Federal  Trade  Commission  against 

9  Regulations  are  prescribed  in  Rule  VII,  in  conformity  with  Sections 
9  and  10  of  the  Federal  Trade  Commission  Act.    Fees  and  mileage  are  the 
same  as  are  paid  in  United  States  courts,  viz:   $1.50  for  each  day  of  at- 
tendance and  five  cents  for  each  mile  of  the  combined  distance  traveled 
going  to  and  returning  from  the  place  of   hearing.     For   special  pro- 
visions operative  in  criminal  and  civil  proceedings  instituted  by  the  United 
States,  see  Section  13  of  Commission  Act;    for  immunity  provisions,  see 
Section  9  of  that  statute. 

10  Subpoenas  duces  tecum  will  be  issued  only  when  supported  by  a  veri- 
fied   application,    setting    forth    as    near    as    may    be    the    documents 
desired  and  the  facts  to  be  proved  by  them.    Such  subpoenas,  however, 
may  be  issued  by  a  commissioner  upon  his  own  motion.    For  practice  gen- 
erally, see  Rule  VII ;  also,  matters  contained  in  note  9,  ante. 


240  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

,  as  a  witness  on  the  part  of ,  on 

the  day  of .,  191 . . ,  at  o'clock  in  the 

noon  of  said  day,  at ,  and  to  bring  with 

you  then  and  there  (here  designate  the 

books,  contracts  or  documents  required  to  be  produced,  describ- 
ing same  with  reasonable  particularity.) 

And  for  failure  to  attend  and  testify  and  produce  the  said  docu- 
mentary evidence  you  will  be  subject  to  such  proceedings  in  a 
District  Court  of  the  United  States  and  to  such  fines  and  pen- 
alties as  are  set  forth  in  Sections  9  and  10  of  the  Federal  Trade 
Commission  Act,  to  which  reference  is  hereby  made. 

Dated  . 


(Seal.)  Commissioner. 


No.  7. 
VERIFIED  APPLICATION  FOR  SUBPCENA  DUCES  TECUM." 

FEDERAL  TRADE  COMMISSION. 
FEDERAL  TRADE  COMMISSION  \ 

AGAINST  v  VERIFIED  APPLICATION. 

CD.  j 

STATE  OF ) 

v  ss: 

COUNTY  OF j 

being  duly  sworn,  says : 

That  he  is  the  (designate  relationship  to  proceeding,  as  com- 
plainant,  defendant,  attorney,  etc.)  ;  that  certain  documentary 
evidence  is  required  in  the  orderly  trial  of  this  proceeding,  on  the 

part  of  the ,  and  that  the  undersigned  applicant 

files  this  verified  application  in  conformity  with  Rule  VII  of  the 
Rules  of  Practice,  to  secure  from  the  commission  the  issuance  of 
its  subpoena  duces  tecum  to  compel  the  production  thereof  upon 
the  hearings  herein ;  that  the  production  of  the  following  docu- 
ments is  required (here  specify  with  reasonable 

particularity  as  near  as  may  be  the  documents  in  question,  so  that 
they  may  be  identified  and  produced;  care  should  be  taken  not  to 
make  a  general  request  for  all  documents  and  papers,  as  such 
requirement  might  constitute  an  "unreasonable  search,"  in  viola- 
tion of  the  Fourth  Amendment  of  the  Constitution)  ;  that  the 

II    Required  by  Rule  VII.    See  notes  9  and  10,  ante. 


FORMS.  241 

production  of  the  said  documents  is  necessary  to  the  undersigned 
applicant  for  the  purpose  of  establishing  the  following  facts 

(here  set  forth  at  sufficient  length  the  facts  to  be 

proved  by  said  documentary  evidence). 

Wherefore  your  applicant  prays  that  a  subpoena  duces  tecum 
may  be  duly  issued  on  behalf  of  the herein,  di- 
rected to  the  said ,  requiring  him  to  attend,  tes- 
tify and  produce  the  documentary  evidence  hereinbefore  speci- 
fied. 

Sworn  to  before  me 

this ....  day  of ,  191 . . 


(Applicant  signs  here.) 


(Official  signature  of  person  authorized 
to  administer  oath,  with  seal.) 


No.  8. 

APPLICATION  FOR  ORDER  REQUIRING  TESTIMONY  TO  BE  TAKEN 
BY  DEPOSITION." 

FEDERAL  TRADE  COMMISSION. 
FEDERAL  TRADE  COMMISSION  "j 

AGAINST  v  APPLICATION  TO  TAKE  TESTIMO 

C.  D.  ) 

The  undersigned  applicant  hereby  requests  the  commission  to 

issue  its  order  requiring  testimony  in  behalf  of 

to  be  taken  by  deposition  in  this  proceeding  for  the  following 
reasons : 

The  witness, ,  residing  at , 

has  information  proving  (or  has  in  his  possession  or  under  his 

12  Rule  VIII  follows  Section  9  of  the  Federal  Trade  Commission  Act 
in  its  requirements  as  to  taking  testimony  by  deposition.  While  no  definite 
authority  is  given  for  specifically  framing  the  questions  to  be  propounded 
to  the  witness,  it  is  probable  the  deposition  could  be  taken  in  that  form. 
Section  9  regulates  the  fees  of  the  person  designated  to  take  testimony,  and 
of  the  witness.  Pursuant  to  Rule  VIII  the  commission — if  good  cause  be 
shown — prepares  and  serves  upon  the  parties  or  their  attorneys  an  order 
granting  the  request ;  but  the  person  designated  to  take  the  testimony  and 
the  time  and  place  of  the  examination  may  or  may  not  be  the  same  as  are 
specified  in  the  application.  Size  of  typewritten  sheet,  etc.,  are  also  pre- 
scribed in  said  Rule. 
16 


242  MANUAL  of  FEDERAL  TRADE  COMMISSION. 

control  documentary  evidence  tending  to  show)  the  following 
facts:  (here  set  forth  the  facts  in  question). 

That  the  evidence  so  sought  to  be  taken  is  relevant  and  im- 
portant to  (the  complainant  or  defendant)  upon 

the  issues  herein. 

The  undersigned  applicant  desires  to  take  the  testimony  of  said 

witness,  ,  whose  post-office  address  is  .... 

,  before  ,  a  

(insert  title  of  officer,  magistrate  or  other  person  empowered  to 

administer  oaths),  whose  post-office  address  is , 

at ,  on  the day  of ,  191 . . ,  as  a 

witness  for  the  above-named  (complainant  or  defendant,  as  the 
case  may  be),  and  requests  the  commission  to  issue  an  order  to 
the  above  effect. 

Dated ,191.. 


(Applicant  signs  here.) 

No.  9. 

DIRECTIONS  FOR  TAKING  TESTIMONY  BY  DEPOSITION  IN  A  CON- 
TESTED PROCEEDING.13 

I.  The  general  style  or  title  of  the  depositions  should  be  drawn 
up  in  substantially  the  following  manner : 

"Deposition  of  witnesses,  produced,  sworn  or  (affirmed),  and 

examined  the day  of ,  in  the  year  one  thousand 

nine  hundred  and ,  at ,  under  and  by 

virtue  of  an  order  issued  by  the  Federal  Trade  Commission  in  a 
certain  contested  proceeding  therein  depending  and  at  issue  be- 
tween Federal  Trade  Commission,  complainant,  and 

defendant,  as  follows : 

A.  B.  of  (insert  his  place  of  residence  and  occupation),  aged 

13  The  examination  is  conducted  under  the  authority  of  an  order 
prepared,  issued  and  served  by  the  commission.  The  practice  is  specified 
in  Section  9  of  the  Trade  Commission  Act  and  in  Rule  VIII.  These  pro- 
ceedings seem  to  contemplate  an  open  commission,  but  there  is  no  express 
prohibition  of  the  method  of  proceeding  by  interrogatories  and  cross-in- 
terrogatories. Rule  VIII  also  regulates  size  of  paper,  etc.,  and  the  notice 
of  hearing  required.  Rule  VII  fixes  the  fees  of  witnesses,  and  compensa- 
tion of  officer  taking  deposition,  see  note  9,  page  239,  ante. 

It  is  prescribed  in  Rule  VIII  that  "the  deposition  shall  be 
certified  in  the  usual  form";   and  the  examining  party  should  insist  upon 
strict  regularity  in  this  and  every  other  essential  particular. 


FORMS.  243 

....  years  and  upwards,  being  duly  and  publicly  sworn  (or  af- 
firmed) pursuant  to  the  terms  of  said  order,  and  examined  on  the 
part  of  the doth  depose  and  say  as  follows : 

[If  the  deposition  is  in  the  form  of  interrogatories  and  cross- 
interrogatories,  proceed,  First,  To  the  first  interrogatory,  he  saith, 
etc.  (Insert  the  witness's  answer.)  Second,  To  the  second  inter- 
rogatory, he  saith,  etc.,  and  so  on  throughout.  If  he  cannot  an- 
swer, let  him  say  that  he  knoweth  not.  If  there  be  any  cross-in- 
terrogatories, the  witness  will  go  on  thus:  First,  To  the  first 
cross-interrogatory,  he  saith,  etc.,  and  so  on  throughout.] 

At  the  termination  of  the  examination,  the  officer  before  whom 
one  or  more  depositions  are  taken,  must  subscribe,  and  annex  to 
each  deposition,  a  certificate,  substantially  in  the  following  form, 
the  blanks  being  properly  filled  up : 

STATE  OF ) 

>•  ss: 

COUNTY  OF j 

"I, ,  do  certify  that , 

a  witness  named  in  the  annexed  order  to  take  testimony  in  this 
contested  proceeding,  personally  appeared  before  me,  the  person 

designated  therein  to  take  said  testimony,  on  the day  of 

,  at o'clock  in  the noon, 

at  the  ,  in  the  State  of  ,  and  after 

being  sworn  (or  'affirmed,'  as  the  case  may  be),  to  testify  the 
truth,  the  whole  truth,  and  nothing  but  the  truth,  did  depose  to 
the  matters  contained  in  the  foregoing  deposition,  and  did,  in  my 
presence,  subscribe  the  same,  and  indorse  the  exhibits  annexed 
thereto.  And  I  further  certify  that  I  have  subscribed  my  name 
to  each  half  sheet  thereof,  and  to  each  exhibit.  And  I  further 

certify  that appeared  in  behalf  of  the 

and  that appeared  in  behalf  of  the 


(Official  Signature.) 

The  officer  should  make  return  on  the  back  of  the  order  by  en- 
dorsement, thus : 

"The  execution  of  this  order  appears  in  certain  schedules 
hereto  annexed. 


(Official  Signature.) 
II.  If  any  exhibit  is  produced  and  proved,  the  exhibit,  or  if 


244  MANUAL  of  FEDERAL  TRADE  COMMISSION. 

the  witness  or  other  person  having  it  in  his  custody  does  not  sur- 
render it,  a  copy  thereof  should  be  annexed  to  the  deposition  to 
which  it  relates,  and  be  subscribed  by  the  witness  proving  it,  and 
be  endorsed  by  the  officer  taking  the  deposition,  in  substantially 
the  following  manner: 

"At  the  execution  of  an  order  to  take  testimony  by  deposition 
in  a  contested  proceeding  before  the  Federal  Trade  Commission, 

between  Federal  Trade  Commission,  complainant,  and 

,  defendant,  this  exhibit  numbered  ....  and  hereto  an- 
nexed, was  produced  and  shown  to  (insert  witness'  name)  and 
by  him  deposed  unto,  and  subscribed  by  him  at  the  time  of  his  ex- 
amination before  the  undersigned. 


(Official  Signature.) 

III.  The  officer  appointed  to  take  the  testimony  by  deposition 
should  sign  his  name  to  each  half  sheet  of  the  depositions  and 
to  each  exhibit. 

IV.  If  an  interpreter  is  employed,  the  officer  before  whom  the 
deposition  is  taken  should  administer  an  oath  in  substantially 
the  following  form,  and  certify  thereto : 

"You  do  solemnly  swear,  or  affirm,  that  you  will  truly  and  faith- 
fully interpret  the  oath  to  be  administered  unto  and  the  questions 
about  to  be  directed  to ,  a  witness  now  to  be  ex- 
amined, out  of  the  English  language  into  the  lan- 
guage, and  that  you  will  truly  and  faithfully  interpret  the  answers 

of  the  said thereto,  out  of  the 

language  into  the  English  language." 

The  deposition  should  be  subscribed  by  the  interpreter  as  well 
as  by  witness,  and  certified  by  the  officer  taking  the  depositions  as 
in  No.  i  hereof. 

V.  All  the  depositions  and  exhibits  must  be  annexed  to  the 
order  for  taking  the  deposition,  or  to  a  certified  copy  thereof, 
and  then  the  order  (the  directions,  if  any,  together  with  the  inter- 
rogatories and  cross-interrogatories,  if  the  testimony  is  taken  by 
that  method),  the  depositions,  and  exhibits,  should  be  folded  into 
a  packet  and  bound  with  tape.    The  officer  taking  the  deposition 
should  then  set  his  seal  at  the  several  meetings  or  crossings  of  the 
tape,  endorse  his  name  on  the  outside,  and  direct  it  thus : 

To  the  Federal  Trade  Commission, 

Washington,  D.  C. 


FORMS.  245 

(If  taken  in  a  foreign  country,  the  letters  U.  S.  A.  should  be 
added  to  the  direction.) 

VI.  When  the  deposition  has  been  thus  taken,  made  up  and 
directed,  it  should  be  returned  in  the  manner  specified  in  the  order, 
if  there  be  any  such  requirement. 

VII.  In  case  of  returning  the  deposition  by  mail,  it  should  be 
deposited  by  the  officer  taking  same,  in  the  nearest  post-office, 
with  the  following  endorsement  by  him  thereon : 

"Deposited  in  the  post-office  at ,  this 

day  of ,  191 . . ,  by  me. 


(Official  Signature.) 
In  case  of  returning  the  deposition  by  a  vessel,  it  should  be 

deposited  by  the  said  officer  in  the  letter  bag  of  such  vessel,  with 

the  following  endorsement  by  him  thereon: 

"Deposited  in  the  letter  bag  of  the ,  now  lying  at 

,  and  bound  for  the  port  of   ,  this 

day  of ,  191 . . ,  by  me. 


(Official  Signature.) 

VIII.  It  is  essential  that  officers  appointed  to  take  testimony 
by  deposition  should  exercise  extreme  care  and  attention  to  ac- 
curately carry  out  the  foregoing  formalities,  as  a  variance  there- 
from may  vitiate  the  execution  of  the  order. 


APPENDIX  A. 

TEXT  OF  THE  FEDERAL  TRADE  COMMISSION 

ACT. 

[PUBLIC — No.  203 — 630  CONGRESS.] 
[H.  R.  15613.] 

An  act  to  create  a  Federal  Trade  Commission,  to  define  its  powers 
and  duties,  and  for  other  purposes. 

FEDERAL  TRADE  COMMISSION  CREATED. 

SEC.  i.  Be  it  enacted  by  the  Senate  and  House  of  Representa- 
tives of  the  United  States  of  America  in  Congress  assembled, 
That  a  Commission  is  hereby  created  and  established,  to  be  known 
as  the  Federal  Trade  Commission  (hereinafter  referred  to  as  the 
Commission),  which  shall  be  composed  of  five  commissioners, 
who  shall  be  appointed  by  the  President,  by  and  with  the  advice 
and  consent  of  the  Senate.  Not  more  than  three  of  the  commis- 
sioners shall  be  members  of  the  same  political  party.  The  first 
commissioners  appointed  shall  continue  in  office  for  terms  of 
three,  four,  five,  six,  and  seven  years,  respectively,  from  the  date 
of  the  taking  effect  of  this  act,  the  term  of  each  to  be  designated 
by  the  President,  but  their  successors  shall  be  appointed  for  terms 
of  seven  years,  except  that  any  person  chosen  to  fill  a  vacancy 
shall  be  appointed  only  for  the  unexpired  term  of  the  commis- 
sioner whom  he  shall  succeed.  The  Commission  shall  choose  a 
chairman  from  its  own  membership.  No  commissioner  shall  en- 
gage in  any  other  business,  vocation,  or  employment.  Any  com- 
missioner may  be  removed  by  the  President  for  inefficiency,  neg- 
lect of  duty,  or  malfeasance  in  office.  A  vacancy  in  the  Commis- 
sion shall  not  impair  the  right  of  the  remaining  commissioners  to 
exercise  all  the  powers  of  the  Commission. 

The  Commission  shall  have  an  official  seal,  which  shall  be  ju- 
dicially noticed. 

SALARIES— SECRETARY  AND  EMPLOYEES. 

SEC.  2.  That  each  commissioner  shall  receive  a  salary  of 
$10,000  a  year,  payable  in  the  same  manner  as  the  salaries  of  the 

246 


TEXT  OF  FEDERAL  TRADE  COMMISSION  ACT.  247 

judges  of  the  courts  of  the  United  States.  The  Commission  shall 
appoint  a  secretary,  who  shall  receive  a  salary  of  $5,000  a  year, 
payable  in  like  manner,  and  it  shall  have  authority  to  employ  and 
fix  the  compensation  of  such  attorneys,  special  experts,  exam- 
iners, clerks  and  other  employees  as  it  may  from  time  to  time 
find  necessary  for  the  proper  performance  of  its  duties 'and  as 
may  be  from  time  to  time  appropriated  for  by  Congress. 

APPOINTMENTS  UNDER  CIVIL  SERVICE  AND  EXCEP- 
TIONS. 

With  the  exception  of  the  secretary,  a  clerk  to  each  Commis- 
sioner, the  attorneys,  and  such  special  experts  and  examiners  as 
the  Commission  may  from  time  to  time  find  necessary  for  the 
conduct  of  its  work,  all  employees  of  the  Commission  shall  be  a 
part  of  the  classified  civil  service,  and  shall  enter  the  service  under 
such  rules  and  regulations  as  may  be  prescribed  by  the  Commis- 
sion and  by  the  Civil  Service  Commission. 

All  of  the  expenses  of  the  Commission,  including  all  necessary 
expenses  for  transportation  incurred  by  the  commissioners  or  by 
their  employees  under  their  orders,  in  making  any  investigation, 
or  upon  official  business  in  any  other  places  than  in  the  city  of 
Washington,  shall  be  allowed  and  paid  on  the  presentation  of 
itemized  vouchers  therefor  approved  by  the  Commission. 

Until  otherwise  provided  by  law,  the  Commission  may  rent 
suitable  offices  for  its  use. 

The  auditor  for  the  State  and  other  departments  shall  receive 
and  examine  all  accounts  of  expenditures  of  the  Commission. 

BUREAU  OF  CORPORATIONS  MERGED  IN  COMMIS- 
SION. 

SEC.  3.  That  upon  the  organization  of  the  Commission  and 
election  of  its  chairman,  the  Bureau  of  Corporations  and  the  of- 
fices of  Commissioner  and  Deputy  Commissioner  of  Corpora- 
tions shall  cease  to  exist ;  and  all  pending  investigations  and  pro- 
ceedings of  the  Bureau  of  Corporations  shall  be  continued  by  the 
Commission. 

All  clerks  and  employees  of  the  said  bureau  shall  be  trans- 
ferred to  and  become  clerks  and  employees  of  the  Commission  at 
their  present  grades  and  salaries.  All  records,  papers,  and  prop- 
erty of  the  said  bureau  shall  become  records,  papers  and  prop- 


248  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

erty  of  the  Commission,  and  all  unexpended  funds  and  appro- 
priations for  the  use  and  maintenance  of  the  said  bureau,  includ- 
ing any  allotment  already  made  to  it  by  the  Secretary  of  Com- 
merce from  the  contingent  appropriation  for  the  Department  of 
Commerce  for  the  fiscal  year  nineteen  hundred  and  fifteen,  or 
from  the  departmental  printing  fund  for  the  fiscal  year  nineteen 
hundred  and  fifteen,  shall  become  funds  and  appropriations  avail- 
able to  be  expended  by  the  Commission  in  the  exercise  of  the 
powers,  authority,  and  duties  conferred  on  it  by  this  act. 

OFFICE  IN  WASHINGTON— MAY  ACT  ELSEWHERE. 

The  principal  office  oj  the  Commission  shall  be  in  the  city  of 
Washington,  but  it  may  meet  and  exercise  all  its  powers  at  any 
other  place.  The  Commission  may,  by  one  or  more  of  its  mem- 
bers, or  by  such  examiners  as  it  may  designate,  prosecute  any  in- 
quiry necessary  to  its  duties  in  any  part  of  the  United  States. 

COMMERCE  DEFINED. 

SEC.  4.  That  the  words  defined  in  this  section  shall  have  the 
following  meaning  when  found  in  this  act,  to-wit : 

"Commerce"  means  commerce  among  the  several  States  or 
with  foreign  nations,  or  in  any  Territory  of  the  United  States  or 
in  the  District  of  Columbia,  or  between  any  such  Territory  and 
another  or  between  any  such  Territory  and  any  State  or  foreign 
nation,  or  between  the  District  of  Columbia  and  any  State  or 
Territory  or  foreign  nation. 

CORPORATION  DEFINED. 

"Corporation"  means  any  company  or  association  incorporated 
or  unincorporated,  which  is  organized  to  carry  on  business  for 
profit  and  has  shares  of  capital  or  capital  stock,  and  any  company 
or  association,  incorporated  or  unincorporated,  without  shares  of 
capital  or  capital  stock,  except  partnerships,  which  is  organized 
to  carry  on  business  for  its  own  profit  or  that  of  its  members. 

DOCUMENTARY  EVIDENCE  DEFINED. 

"Documentary  evidence"  means  all  documents,  papers,  and 
correspondence  in  existence  at  and  after  the  passage  of  this  act. 


TEXT  OF  FEDERAL  TRADE  COMMISSION  ACT.  249 

ACTS  TO  REGULATE  COMMERCE  DEFINED. 

"Acts  to  regulate  commerce"  means  the  act  entitled  "An  act  to 
regulate  commerce,"  approved  February  fourteenth,  eighteen  hun- 
dred and  eighty-seven,  and  all  acts  amendatory  thereof  and  sup- 
plementary thereto. 

ANTI-TRUST  ACTS  DEFINED. 

"Anti-trust  acts"  means  the  act  entitled  "An  act  to  protect 
trade  and  commerce  against  unlawful  restraints  and  monopolies," 
approved  July  second,  eighteen  hundred  and  ninety ;  also  the  sec- 
tions seventy-three  to  seventy-seven,  inclusive,  of  an  act  entitled 
"An  act  to  reduce  taxation,  to  provide  revenue  for  the  govern- 
ment, and  for  other  purposes,"  approved  August  twenty-seventh, 
eighteen  hundred  and  ninety- four ;  and  also  the  act  entitled  "An 
act  to  amend  sections  seventy-three  and  seventy-six  of  the  act  of 
August  twenty-seventh,  eighteen  hundred  and  ninety-four,  enti- 
tled 'An  act  to  reduce  taxation,  to  provide  revenue  for  the  gov- 
ernment, and  for  other  purposes/  "  approved  February  twelfth, 
nineteen  hundred  and  thirteen. 

UNFAIR  METHODS  OF  COMPETITION  ARE  UNLAWFUL. 

SEC.  5.  That  unfair  methods  of  competition  in  commerce  are 
hereby  declared  unlawful. 

COMMISSION  EMPOWERED  TO  PREVENT  USE  OF  UN- 
FAIR METHODS. 

The  Commission  is  hereby  empowered  and  directed  to  prevent 
persons,  partnerships,  or  corporations,  except  banks,1  and  com- 
mon carriers  subject  to  the  acts  to  regulate  commerce,  from  using 
unfair  methods  of  competition  in  commerce. 

i  The  insertion  of  a  comma  after  the  word  "banks"  is  a  clerical  error. 
If  the  intent  of  the  law  were  solely  determined  by  punctuation,  the  exempt- 
ing clause  would  not  include  common  carriers,  and  they  would  thus  be  left 
subject  to  the  jurisdiction  of  the  Federal  Trade  Commission.  This  is 
controverted  by  the  context  and  by  the  general  purpose  and  provisions  of 
the  statute. 

Attention  was  drawn  f>  the  error  previous  to  the  passage  of  the  bill,  but 
it  remains  uncorrected. 


250  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

PROCEDURE  BEFORE  COMMISSION  AND  IN  COURT  TO 
ENFORCE  COMMISSION'S  ORDER. 

Whenever  the  Commission  shall  have  reason  to  believe  that 
any  such  person,  partnership,  or  corporation  has  been  or  is  using 
any  unfair  method  of  competition  in  commerce,  and  if  it  shall 
appear  to  the  Commission  that  a  proceeding  by  it  in  respect  there- 
of would  be  to  the  interest  of  the  public,  it  shall  issue  and  serve 
upon  such  person,  partnership,  or  corporation  a  complaint  stating 
its  charges  in  that  respect,  and  containing  a  notice  of  a  hearing 
upon  a  day  and  at  a  place  therein  fixed  at  least  thirty  days  after 
the  service  of  said  complaint.  The  person,  partnership,  or  cor- 
poration so  complained  of  shall  have  the  right  to  appear  at  the 
place  and  time  so  fixed  and  show  cause  why  an  order  should  not 
be  entered  by  the  Commission  requiring  such  person,  partner- 
ship, or  corporation  to  cease  and  desist  from  the  violation  of  the 
law  so  charged  in  said  complaint.  Any  person,  partnership,  or 
corporation  may  make  application,  and  upon  good  cause  shown 
may  be  allowed  by  the  Commission,  to  intervene  and  appear  in 
said  proceeding  by  counsel  or  in  person.  The  testimony  in  any 
such  proceeding  shall  be  reduced  to  writing  and  filed  in  the  office 
of  the  Commission.  If  upon  such  hearing  the  Commission  shall 
be  of  the  opinion  that  the  method  of  competition  in  question  is 
prohibited  by  this  act,  it  shall  make  a  report  in  writing  in  which 
it  shall  state  its  findings  as  to  the  facts,  and  shall  issue  and  cause 
to  be  served  on  such  person,  partnership,  or  corporation  an  order 
requiring  such  person,  partnership,  or  corporation  to  cease  and 
desist  from  using  such  method  of  competition.  Until  a  transcript 
of  the  record  in  such  hearing  shall  have  been  filed  in  a  circuit 
court  of  appeals  of  the  United  States,  as  hereinafter  provided, 
the  Commission  may  at  any  time,  upon  such  notice  and  in  such 
manner  as  it  shall  deem  proper,  modify  or  set  aside,  in  whole  or 
in  part,  any  report  or  any  order  made  or  issued  by  it  under  this 
section. 

If  such  person,  partnership,  or  corporation  fails  or  neglects  to 
obey  such  order  of  the  Commission  while  the  same  is  in  effect, 
the  Commission  may  apply  to  the  Circuit  Court  of  Appeals  of  the 
United  States,  within  any  circuit  where  the  method  of  competi- 
tion in  question  was  used  or  where  such  person,  partnership,  or 
corporation  resides  or  carries  on  business,  for  the  enforcement  of 
its  order,  and  shall  certify  and  file  with  its  application  a  transcript 


TEXT  OF  FEDERAL  TRADE  COMMISSION  ACT.  251 

of  the  entire  record  in  the  proceeding,  including  all  the  testimony 
taken  and  the  report  and  order  of  the  Commission.  Upon  such 
filing  of  the  application  and  transcript  the  court  shall  cause  notice 
thereof  to  be  served  upon  such  person,  partnership,  or  corporation 
and  thereupon  shall  have  jurisdiction  of  the  proceeding  and  of 
the  question  determined  therein,  and  shall  have  power  to  make 
and  enter  upon  the  pleadings,  testimony,  and  proceedings  set 
forth  in  such  transcript  a  decree  affirming,  modifying,  or  setting 
aside  the  order  of  the  Commission.  The  findings  of  the  Commis- 
sion as  to  the  facts,  if  supported  by  testimony,  shall  be  conclusive. 
If  either  party  shall  apply  to  the  court  for  leave  to  adduce  addi- 
tional evidence,  and  shall  show  to  the  satisfaction  of  the  court 
that  such  additional  evidence  is  material  and  that  there  were  rea- 
sonable grounds  for  the  failure  to  adduce  such  evidence  in  the 
proceeding  before  the  Commission,  the  court  may  order  such  ad- 
ditional evidence  to  be  taken  before  the  Commission  and  to  be 
adduced  upon  the  hearing  in  such  manner  and  upon  such  terms 
and  conditions  as  to  the  court  may  seem  proper.  The  Commis- 
sion may  modify  its  findings  as  to  the  facts,  or  make  new  findings, 
by  reason  of  the  additional  evidence  so  taken,  and  it  shall  file 
such  modified  or  new  findings,  which,  if  supported  by  testimony, 
shall  be  conclusive,  and  its  recommendation,  if  any,  for  the  modi- 
fication or  setting  aside  of  its  original  order,  with  the  return  of 
such  additional  evidence.  The  judgment  and  decree  of  the  court 
shall  be  final,  except  that  the  same  shall  be  subject  to  review  by 
the  Supreme  Court  upon  certiorari  as  provided  in  section  two 
hundred  and  forty  of  the  Judicial  Code. 

PROCEDURE  IN  COURT  TO  SET  ASIDE  COMMISSION'S 
ORDER. 

Any  party  required  by  such  order  of  the  Commission  to  cease 
and  desist  from  using  such  method  of  competition  may  obtain  a 
review  of  such  order  in  said  Circuit  Court  of  Appeals  by  filing  in 
the  court  a  written  petition  praying  that  the  order  of  the  Commis- 
sion be  set  aside.  A  copy  of  such  petition  shall  be  forthwith 
served  upon  the  Commission,  and  thereupon  the  Commission 
forthwith  shall  certify  and  file  in  the  court  a  transcript  of  the 
record  as  hereinbefore  provided.  Upon  the  filing  of  the  transcript 
the  court  shall  have  the  same  jurisdiction  to  affirm,  set  aside,  or 
modify  the  order  of  the  Commission  as  in  the  case  of  an  appli- 


252  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

cation  by  the  Commission  for  the  enforcement  of  its  order,  and 
the  findings  of  the  Commission  as  to  the  facts,  if  supported  by 
testimony,  shall  in  like  manner  be  conclusive. 

CIRCUIT  COURT  OF  APPEALS  EXCLUSIVE  JURISDIC- 
TION. 

The  jurisdiction  of  the  Circuit  Court  of  Appeals  of  the  United 
States  to  enforce,  set  aside,  or  modify  orders  of  the  Commission 
shall  be  exclusive. 

EXPEDITION  OF  COURT  PROCEEDINGS.  NO  ORDER  OR 
JUDGMENT  TO  RELIEVE  FROM  LIABILITY. 

Such  proceedings  in  the  Circuit  Court  of  Appeals  shall  be 
given  precedence  over  other  cases  pending  therein,  and  shall  be 
in  every  way  expedited.  No  order  of  the  Commission  or  judg- 
ment of  the  court  to  enforce  the  same  shall  in  any  wise  relieve  or 
absolve  any  person,  partnership,  or  corporation  from  any  liability 
under  the  Anti-trust  acts. 

SERVICE  OF  PROCESS. 

Complaints,  orders,  and  other  processes  of  the  Commission 
under  this  section  may  be  served  by  anyone  duly  authorized  by 
the  Commission,  either  (a)  by  delivering  a  copy  thereof  to  the 
person  to  be  served,  or  to  a  member  of  the  partnership  to  be 
served,  or  to  the  president,  secretary,  or  other  executive  officer 
or  a  director  of  the  corporation  to  be  served ;  or  (b)  by  leaving  a 
copy  thereof  at  the  principal  office  or  place  of  business  of  such 
person,  partnership,  or  corporation;  or  (c)  by  registering  and 
mailing  a  copy  thereof  addressed  to  such  person,  partnership,  or 
corporation  at  his  or  its  principal  office  or  place  of  business.  The 
verified  return  by  the  person  so  serving  said  complaint,  order,  or 
other  process  setting  forth  the  manner  of  said  service  shall  be 
proof  of  the  same,  and  the  return  post  office  receipt  for  said 
complaint,  order,  or  other  process  registered  and  mailed  as  afore- 
said shall  be  proof  of  the  service  of  the  same. 

GENERAL  INVESTIGATING  POWER  OVER  CORPORA- 
TIONS EXCEPT  BANKS  AND  COMMON  CARRIERS. 

SEC.  6.  That  the  Commission  shall  also  have  power — 
(a)  To  gather  and  compile  information  concerning,  and  to  in- 
vestigate from  time  to  time  the  organization,  business,  conduct, 


TEXT  OF  FEDERAL  TRADE  COMMISSION  ACT.  253 

practices,  and  management  of  any  corporation  engaged  in  com- 
merce, excepting  banks  and  common  carriers  subject  to  the  act 
to  regulate  commerce,  and  its  relation  to  other  corporations  and 
to  individuals,  associations,  and  partnerships. 

POWER  TO  REQUIRE  REPORTS. 

(b)  To  require,  by  general  or  special  orders,  corporations  en- 
gaged in  commerce,  excepting  banks,  and  common  carriers  sub- 
ject to  the  act  to  regulate  commerce,  or  any  class  of  them,  or 
any  of  them,  respectively,  to  file  with  the  Commission  in  such 
form  as  the  Commission  may  prescribe  annual  or  special,  or  both 
annual  and  special,  reports  or  answers  in  writing  to  specific  ques- 
tions, furnishing  to  the  Commission  such  information  as  it  may 
require  as  to  the  organization,  business,  conduct,  practices,  man- 
agement, and  relation  to  other  corporations,  partnerships,  and  in- 
dividuals of  the  respective  corporations  filing  such  reports  or 
answers  in  writing.     Such  reports  and  answers  shall  be  made 
under  oath,  or  otherwise,  as  the  Commission  may  prescribe,  and 
shall  be  filed  with  the  Commission  within  such  reasonable  period 
as  the  Commission  may  prescribe,  unless   additional   time   be 
granted  in  any  case  by  the  Commission. 

POWER    TO   INVESTIGATE   CARRYING   OUT   OF  ANTI- 
TRUST DECREES. 

(c)  Whenever  a  final  decree  has  been  entered  against  any  de- 
fendant corporation  in  any  suit  brought  by  the  United  States  to 
prevent  and  restrain  any  violation  of  the  Anti-trust  acts,  to  make 
investigation,  upon  its  own  initiative,  of  the  manner  in  which  the 
decree  has  been  or  is  being  carried  out,  and  upon  the  application 
of  the  Attorney  General  it  shall  be  its  duty  to  make  such  investi- 
gation.   It  shall  transmit  to  the  Attorney  General  a  report  em- 
bodying its  findings  and  recommendations  as  a  result  of  any  such 
investigation,  and  the  report  shall  be  made  public  in  the  discre- 
tion of  the  Commission. 

INVESTIGATION     OF     VIOLATIONS     OF     ANTI-TRUST 
LAWS. 

(d)  Upon  the  direction  of  the  President  or  either  House  of 
Congress  to  investigate  and  report  the  facts  relating  to  any  al- 
leged violations  of  the  Anti-trust  acts  by  any  corporation. 


254  MANUAL  OE  FEDERAL  TRADE  COMMISSION. 

POWER  TO  RECOMMEND  READJUSTMENT  OF  BUSI- 
NESS. 

(e)  Upon  the  application  of  the  Attorney  General  to  investi- 
gate and  make  recommendations   for  the  readjustment  of  the 
business  of  any  corporation  alleged  to  be  violating  the  Anti-trust 
acts  in  order  that  the  corporation  may  thereafter  maintain  its  or- 
ganization, management,  and  conduct  of  business  in  accordance 
with  law. 

POWER  TO  MAKE  REPORTS. 

(f)  To  make  public  from  time  to  time  such  portions  of  the  in- 
formation obtained  by  it  hereunder,  except  trade  secrets  and 
names  of  customers,  as  it  shall  deem  expedient  in  the  public  in- 
terest;  and  to  make  annual  and  special  reports  to  the  Congress 
and  to  submit  therewith  recommendations  for  additional  legisla- 
tion;  and  to  provide  for  the  publication  of  its  reports  and  de- 
cisions in  such  form  and  manner  as  may  be  best  adapted  for 
public  information  and  use. 

POWER  TO  CLASSIFY  CORPORATIONS. 

(g)  From  time  to  time  to  classify  corporations  and  to  make 
rules  and  regulations  for  the  purpose  of  carrying  out  the  pro- 
visions of  this  act. 

POWER  TO  INVESTIGATE  FOREIGN  TRADE  CONDI- 
TIONS. 

(h)  To  investigate,  from  time  to  time,  trade  conditions  in  and 
with  foreign  countries  where  associations,  combinations,  or  prac- 
tices of  manufacturers,  merchants,  or  traders,  or  other  condi- 
tions, may  affect  the  foreign  trade  of  the  United  States,  and  to 
report  to  Congress  thereon,  with  such  recommendations  as  it 
deems  advisable. 

COMMISSION  TO  ACT  AS  MASTER  IN  CHANCERY. 

SEC.  7.  That  in  any  suit  in  equity  brought  by  or  under  the  di- 
rection of  the  Attorney  General  as  provided  in  the  Anti-trust 
acts,  the  court  may,  upon  the  conclusion  of  the  testimony  therein,  if 
it  shall  be  then  of  opinion  that  the  complainant  is  entitled  to  relief, 
refer  said  suit  to  the  Commission,  as  a  master  in  chancery,  to  ascer- 


TEXT  OF  FEDERAL  TRADE  COMMISSION  ACT.  255 

tain  and  report  an  appropriate  form  of  decree  therein.  The  Com- 
mission shall  proceed  upon  such  notice  to  the  parties  and  under 
such  rules  of  procedure  as  the  court  may  prescribe,  and  upon 
the  coming  in  of  such  report  such  exceptions  may  be  filed  and 
such  proceedings  had  in  relation  thereto  as  upon  the  report  of  a 
master  in  other  equity  causes,  but  the  court  may  adopt  or  reject 
such  report,  in  whole  or  in  part,  and  enter  such  decree  as  the  na- 
ture of  the  case  may  in  its  judgment  require. 

GOVERNMENT  RECORDS  AVAILABLE  TO  COMMISSION. 

SEC.  8.  That  the  several  departments  and  bureaus  of  the  gov- 
ernment when  directed  by  the  President  shall  furnish  the  Com- 
mission, upon  its  request,  all  records,  papers,  and  information  in 
their  possession  relating  to  any  corporation  subject  to  any  of  the 
provisions  of  this  act,  and  shall  detail  from  time  to  time  such  of- 
ficials and  employees  to  the  Commission  as  he  may  direct. 

COMMISSION  TO  HAVE  ACCESS  TO  CORPORATE 
RECORDS. 

SEC.  9.  That  for  the  purposes  of  this  act  the  Commission,  or 
its  duly  authorized  agent  or  agents,  shall  at  all  reasonable  times 
have  access  to,  for  the  purpose  of  examination,  and  the  right  to 
copy  any  documentary  evidence  of  any  corporation  being  inves- 
tigated or  proceeded  against;  and  the  Commission  shall  have 
power  to  require  by  subpoena  the  attendance  and  testimony  of 
witnesses  and  the  production  of  all  such  documentary  evidence 
relating  to  any  matter  under  investigation.  Any  member  of  the 
Commission  may  sign  subpoenas,  and  members  and  examiners  of 
the  Commission  may  administer  oaths  and  affirmations,  examine 
witnesses,  and  receive  evidence. 

COMMISSION  MAY  REQUIRE  ATTENDANCE  OF  WIT- 
NESSES AND  PRODUCTION  OF  DOCUMENTARY  EVI- 
DENCE. 

Such  attendance  of  witnesses,  and  the  production  of  such  doc- 
umentary evidence,  may  be  required  from  any  place  in  the  United 
States,  at  any  designated  place  of  hearing.  And  in  case  of  dis- 
obedience to  a  subpoena  the  Commission  may  invoke  the  aid  of 
any  court  of  the  United  States  in  requiring  the  attendance  and 
testimony  of  witnesses  and  the  production  of  documentary  evi- 
dence. 


256  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

DISTRICT  COURTS  MAY  ENFORCE  ABOVE  REQUIRE- 
MENTS. 

Any  of  the  district  courts  of  the  United  States  within  the  jur- 
isdiction of  which  such  inquiry  is  carried  on  may,  in  case  of  con- 
tumacy or  refusal  to  obey  a  subpoena  issued  to  any  corporation  or 
other  person,  issue  an  order  requiring  such  corporation  or  other 
person  to  appear  before  the  Commission,  or  to  produce  documen- 
tary evidence  if  so  ordered,  or  to  give  evidence  touching  the  mat- 
ter in  question ;  and  any  failure  to  obey  such  order  of  the  court 
may  be  punished  by  such  court  as  a  contempt  thereof. 

MANDAMUS  PROCEEDINGS  AUTHORIZED. 

Upon  the  application  of  the  Attorney  General  of  the  United 
States,  at  the  request  of  the  Commission,  the  district  courts  of  the 
United  States  shall  have  jurisdiction  to  issue  writs  of  mandamus 
commanding  any  person  or  corporation  to  comply  with  the  pro- 
visions of  this  act  or  any  order  of  the  Commission  made  in  pur- 
suance thereof. 

TESTIMONY  MAY  BE  TAKEN  BY  DEPOSITION. 

The  Commission  may  order  testimony  to  be  taken  by  deposition 
in  any  proceeding  or  investigation  pending  under  this  act  at  any 
stage  of  such  proceeding  or  investigation.  Such  depositions  may 
be  taken  before  any  person  designated  by  the  Commission  and 
having  power  to  administer  oaths.  Such  testimony  shall  be  re- 
duced to  writing  by  the  person  taking  the  deposition,  or  under  his 
direction,  and  shall  then  be  subscribed  by  the  deponent.  Any  per- 
son may  be  compelled  to  appear  and  depose  and  to  produce  docu- 
mentary evidence  in  the  same  manner  as  witnesses  may  be  com- 
pelled to  appear  and  testify  and  produce  documentary  evidence 
before  the  Commission  as  hereinbefore  provided. 

WITNESS  FEES. 

Witnesses  summoned  before  the  Commission  shall  be  paid  the 
same  fees  and  mileage  that  are  paid  witnesses  in  the  courts  of  the 
United  States,  and  witnesses  whose  depositions  are  taken  and  the 
persons  taking  the  same  shall  severally  be  entitled  to  the  same 
fees  as  are  paid  for  like  services  in  the  courts  of  the  United 
States. 


TEXT  OF  FEDERAL  TRADE  COMMISSION  ACT.  257 

IMMUNITY. 

No  person  shall  be  excused  from  attending  and  testifying  or 
from  producing  documentary  evidence  before  the  Commission 
or  in  obedience  to  the  subpoena  of  the  Commission  on  the  ground 
or  for  the  reason  that  the  testimony  or  evidence,  documentary  or 
otherwise,  required  of  him  may  tend  to  criminate  him  or  subject 
him  to  a  penalty  or  forfeiture.  But  no  natural  person  shall  be 
prosecuted  or  subjected  to  any  penalty  or  forfeiture  for  or  on  ac- 
count of  any  transaction,  matter,  or  thing  concerning  which  he 
may  testify,  or  produce  evidence,  documentary  or  otherwise,  be- 
fore the  Commission  in  obedience  to  a  subpoena  issued  by  it: 
Provided,  That  no  natural  person  so  testifying  shall  be  exempt 
from  prosecution  and  punishment  for  perjury  committed  in  so 
testifying. 

FAILURE  TO  TESTIFY  CRIMINAL  OFFENCE. 

SEC.  10.  That  any  person  who  shall  neglect  or  refuse  to  attend 
and  testify,  or  to  answer  any  lawful  inquiry,  or  to  produce  docu- 
mentary evidence,  if  in  his  power  to  do  so,  in  obedience  to  the 
subpoena  or  lawful  requirement  of  the  Commission,  shall  be  guilty 
of  an  offence  and  upon  conviction  thereof  by  a  court  of  compe- 
tent jurisdiction  shall  be  punished  by  a  fine  of  not  less  than  $1,000 
nor  more  than  $5,000,  or  by  imprisonment  for  not  more  than  one 
year,  or  by  both  such  fine  and  imprisonment. 

FALSIFICATION,  ETC.,  OF  CORPORATE  RECORDS  A 
CRIMINAL  OFFENCE. 

Any  person  who  shall  willfully  make,  or  cause  to  be  made,  any 
false  entry  or  statement  of  fact  in  any  report  required  to  be  made 
under  this  act,  or  who  shall  willfully  make,  or  cause  to  be  made, 
any  false  entry  in  any  account,  record,  or  memorandum  kept  by 
any  corporation  subject  to  this  act,  or  who  shall  willfully  neglect 
or  fail  to  make,  or  to  cause  to  be  made,  full,  true,  and  correct  en- 
tries in  such  accounts,  records,  or  memoranda  of  all  facts,  and 
transactions  appertaining  to  the  business  of  such  corporation,  or 
who  shall  willfully  remove  out  of  the  jurisdiction  of  the  United 
States,  or  willfully  mutilate,  alter,  or  by  any  other  means  falsify 
any  documentary  evidence  of  such  corporation,  or  who  shall  will- 
fully refuse  to  submit  to  the  Commission  or  to  any  of  its  author- 
ized agents,  for  the  purpose  of  inspection  and  taking  copies,  any 
documentary  evidence  of  such  corporation  in  his  possession  or 
17 


258  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

within  his  control,  shall  be  deemed  guilty  of  an  offence  against 
the  United  States,  and  shall  be  subject,  upon  conviction  in  any 
court  of  the  United  States  of  competent  jurisdiction,  to  a  fine  of 
not  less  than  $1,000  nor  more  than  $5,000,  or  to  imprisonment  for 
a  term  of  not  more  than  three  years,  or  to  both  such  fine  and  im- 
prisonment. 

PENALTY  FOR  FAILURE  TO  FILE  REPORTS. 

If  any  corporation  required  by  this  act  to  file  any  annual  or 
special  report  shall  fail  so  to  do  within  the  time  fixed  by  the  Com- 
mission for  filing  the  same,  and  such  failure  shall  continue  for 
thirty  days  after  notice  of  such  default,  the  corporation  shall 
forfeit  to  the  United  States  the  sum  of  $100  for  each  and  every 
day  of  the  continuance  of  such  failure,  which  forfeiture  shall  be 
payable  into  the  Treasury  of  the  United  States,  and  shall  be  re- 
coverable in  a  civil  suit  in  the  name  of  the  United  States  brought 
in  the  district  where  the  corporation  has  its  principal  office  or  in 
any  district  in  which  it  shall  do  business.  It  shall  be  the  duty 
of  the  various  district  attorneys,  under  the  direction  of  the  At- 
torney General  of  the  United  States,  to  prosecute  for  the  recov- 
ery of  forfeitures.  The  costs  and  expenses  of  such  prosecution 
shall  be  paid  out  of  the  appropriation  for  the  expenses  of  the 
courts  of  the  United  States. 

UNAUTHORIZED  PUBLICITY  BY  EMPLOYEE  OF  COM- 
MISSION AN  OFFENCE. 

Any  officer  or  employee  of  the  Commission  who  shall  make 
public  any  information  obtained  by  the  Commission  without  its 
authority,  unless  directed  by  a  court,  shall  be  deemed  guilty  of  a 
misdemeanor,  and,  upon  conviction  thereof,  shall  be  punished  by 
a  fine  not  exceeding  $5,000,  or  by  imprisonment  not  exceeding 
one  year,  or  by  fine  and  imprisonment,  in  the  discretion  of  the 
court. 

ANTI-TRUST  ACTS  AND  ACTS  TO  REGULATE  COM- 
MERCE NOT  MODIFIED. 

SEC.  II.  Nothing  contained  in  this  act  shall  be  construed  to 
prevent  or  interfere  with  the  enforcement  of  the  provision  of  the 
Anti-trust  acts  or  the  acts  to  regulate  commerce,  nor  shall  any- 
thing contained  in  the  act  be  construed  to  alter,  modify,  or  repeal 
the  said  Anti-trust  acts  or  the  acts  to  regulate  commerce  or  any 
part  or  parts  theerof. 

Approved,  September  26,  1914. 


APPENDIX  B. 

TEXT  OF  THE  CLAYTON  LAW  OR  SUPPLEMENTAL 
ANTI-TRUST  LAW. 

[PUBLIC — No.  212 — 630  CONGRESS.] 
[H.  R.  15657-] 

An  act  to  supplement  existing  laws  against  unlawful  restraints 
and  monopolies,  and  for  other  purposes. 

ANTI-TRUST  LAWS  DEFINED. 

SEC.  i.  Be  it  enacted  by  the  Senate  and  House  of  Representa- 
tives of  the  United  States  of  America  in  Congress  assembled, 
That  "Anti-trust  laws,"  as  used  herein,  includes  the  act  entitled 
"An  act  to  protect  trade  and  commerce  against  unlawful  re- 
straints and  monopolies,"  approved  July  second,  eighteen  hun- 
dred and  ninety;  Sections  seventy-three  to  seventy-seven,  inclu- 
sive, of  an  act  entitled  "An  act  to  reduce  taxation,  to  provide  rev- 
enue for  the  government,  and  for  other  purposes,"  of  August 
twenty-seventh,  eighteen  hundred  and  ninety-four;  an  act  enti- 
tled "An  act  to  amend  Sections  seventy-three  and  seventy-six  of 
the  act  of  August  twenty-seventh,  eighteen  hundred  and  ninety- 
four,  entitled  'An  act  to  reduce  taxation,  to  provide  revenue  for 
the  government,  and  for  other  purposes,' "  approved  February 
twelfth,  nineteen  hundred  and  thirteen;  and  also  this  act. 

COMMERCE  DEFINED. 

"Commerce,"  as  used  herein,  means  trade  or  commerce  among 
the  several  States  and  with  foreign  nations,  or  between  the  Dis- 
trict of  Columbia  or  any  Territory  of  the  United  States  and  any 
State,  Territory,  or  foreign  nation,  or  between  any  insular  pos- 
sessions or  other  places  under  the  jurisdiction  of  the  United 
States,  or  between  any  such  possession  or  place  and  any  State  or 
Territory  of  the  United  States  or  the  District  of  Columbia  or  any 
foreign  nation,  or  within  the  District  of  Columbia  or  any  Terri- 
tory or  any  insular  possession  or  other  place  under  the  jurisdic- 
tion of  the  United  States:  Provided,  That  nothing  in  this  act 
contained  shall  apply  to  the  Philippine  Islands. 

259 


260  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

PERSON  DEFINED. 

The  word  "person"  or  "persons"  wherever  used  in  this  act 
shall  be  deemed  to  include  corporations  and  associations  existing 
under  or  authorized  by  the  laws  of  either  the  United  States,  the 
laws  of  any  of  the  Territories,  the  laws  of  any  State,  or  the  laws 
of  any  foreign  country. 

PRICE  DISCRIMINATION. 

SEC.  2.  That  it  shall  be  unlawful  for  any  person  engaged  in 
commerce,  in  the  course  of  such  commerce,  either  directly  or 
indirectly  to  discriminate  in  price  between  different  purchasers  of 
commodities,  which  commodities  are  sold  for  use,  consumption, 
or  resale  within  the  United  States  or  any  Territory  thereof  or 
the  District  of  Columbia  or  any  insular  possession  or  other  place 
under  the  jurisdiction  of  the  United  States,  where  the  effect  of 
such  discrimination  may  be  to  substantially  lessen  competition  or 
tend  to  create  a  monopoly  in  any  line  of  commerce :  Provided, 
That  nothing  herein  contained  shall  prevent  discrimination  in 
prices  between  purchasers  of  commodities  on  account  of  differ- 
ences in  the  grade,  quality,  or  quantity  of  the  commodity  sold,  or 
that  makes  only  due  allowance  for  difference  in  the  cost  of  sell- 
ing or  transportation,  or  discrimination  in  price  in  the  same  or 
different  communities  made  in  good  faith  to  meet  competition: 
And  provided  further,  That  nothing  herein  contained  shall  pre- 
vent persons  engaged  in  selling  goods,  wares,  or  merchandise  in 
commerce  from  selecting  their  own  customers)  in  bona  fide  trans- 
actions and  not  in  restraint  of  trade. 

TYING  LEASES,  SALES  AND  CONTRACTS. 

SEC.  3.  That  it  shall  be  unlawful  for  any  person  engaged  in 
commerce,  in  the  course  of  such  commerce,  to  lease  or  make  a 
sale  or  contract  for  sale  of  goods,  wares,  merchandise,  machin- 
ery, supplies  or  other  commodities,  whether  patented  or  unpat- 
ented,  for  use,  consumption  or  resale  within  the  United  States 
or  any  Territory  thereof  or  the  District  of  Columbia  or  any  in- 
sular possession  or  other  place  under  the  jurisdiction  of  the  United 
States,  or  fix  a  price  charged  therefor,  or  discount  from,  or  re- 
bate upon,  such  price,  on  the  condition,  agreement  or  understand- 
ing that  the  lessee  or  purchaser  thereof  shall  not  use  or  deal  in 
the  goods,  wares,  merchandise,  machinery,  supplies  or  other  com- 


TEXT  OF  CLAYTON  LAW.  261 

modities  of  a  competitor  or  competitors  of  the  lessor  or  seller, 
where  the  effect  of  such  lease,  sale,  or  contract  for  sale  or  such 
condition,  agreement  or  understanding  may  be  to  substantially 
lessen  competition  or  tend  to  create  a  monopoly  in  any  line  of 
commerce. 

THREE-FOLD  DAMAGES  RECOVERABLE  BY  PERSON 
INJURED. 

SEC.  4.  That  any  person  who  shall  be  injured  in  his  business  or 
property  by  reason  of  anything  forbidden  in  the  Anti-trust  laws 
may  sue  therefor  in  any  district  court  of  the  United  States  in  the 
district  in  which  the  defendant  resides  or  is  found  or  has  an 
agent,  without  respect  to  the  amount  in  controversy,  and  shall 
recover  threefold  the  damages  by  him  sustained,  and  the  cost  of 
suit,  including  a,  reasonable  attorney's  fee. 

FINAL  DECREE  PRIM  A  FACIE  EVIDENCE  IN  ANOTHER 
PROCEEDING. 

SEC.  5.  That  a  final  judgment  or  decree  hereafter  rendered  in 
any  criminal  prosecution  or  in  any  suit  or  proceeding  in  equity 
brought  by  or  on  behalf  of  the  United  States  under  the  Anti-trust 
laws  to  the  effect  that  a  defendant  has  violated  said  laws  shall  be 
prima  facie  evidence  against  such  defendant  in  any  suit  or  pro- 
ceeding brought  by  any  other  party  against  such  defendant  under 
said  laws  as  to  all  matters  respecting  which  said  judgment  or 
decree  would  be  an  estoppel  as  between  the  parties  thereto: 
Provided,  This  section  shall  not  apply  to  consent  judgments  or 
decrees  entered  before  any  testimony  has  been  taken :  Provided 
further,  This  section  shall  not  apply  to  consent  judgments  or  de- 
crees rendered  in  criminal  proceedings  or  suits  in  equity,  now 
pending,  in  which  the  taking  of  testimony  has  been  commenced 
but  has  not  been  concluded,  provided  such  judgments  or  decrees 
are  rendered  before  any  further  testimony  is  taken. 

STATUTE  OF  LIMITATIONS  INOPERATIVE  AGAINST 
PRIVATE  CLAIMS  PENDING  GOVERNMENT  SUIT. 

Whenever  any  suit  or  proceeding  in  equity  or  criminal  prosecu- 
tion is  instituted  by  the  United  States  to  prevent,  restrain  or 
punish  violations  of  any  of  the  Anti-trust  laws,  the  running  of 
the  statute  of  limitations  in  respect  of  each  and  every  private 


262  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

right  of  action  arising  under  said  laws  and  based  in  whole  or  in 
part  on  any  matter  complained  of  in  said  suit  or  proceeding  shall 
be  suspended  during  the  pendency  thereof. 

EXEMPTION  OF  LABOR,  HORTICULTURAL  AND  AGRI- 
CULTURAL ORGANIZATIONS  AND  MEMBERS. 

SEC.  6.  That  the  labor  of  a  human  being  is  not  a  commodity 
or  article  of  commerce.  Nothing  contained  in  the  Anti-trust  laws 
shall  be  construed  to  forbid  the  existence  and  operation  of  labor, 
agricultural,  or  horticultural  organizations,  instituted  for  the  pur- 
poses of  mutual  help,  and  not  having  capital  stock  or  conducted 
for  profit,  or  to  forbid  or  restrain  individual  members  of  such 
organizations  from  lawfully  carrying  out  the  legitimate  objects 
thereof;  nor  shall  such  organizations,  or  the  members  thereof, 
be  held  or  construed  to  be  illegal  combinations  or  conspiracies  in 
restraint  of  trade,  under  the  Anti-trust  laws. 

CORPORATE  STOCK  OWNERSHIP  IN  COMPETING  COR- 
PORATION UNLAWFUL. 

SEC.  7.  That  no  corporation  engaged  in  commerce  shall  ac- 
quire, directly  or  indirectly,  the  whole  or  any  part  of  the  stock 
or  other  share  capital  of  another  corporation  engaged  also  in 
commerce,  where  the  effect  of  such  acquisition  may  be  to  sub- 
stantially lessen  competition  between  the  corporation  whose  stock 
is  so  acquired  and  the  corporation  making  the  acquisition,  or  to 
restrain  such  commerce  in  any  section  or  community,  or  tend  to 
create  a  monopoly  of  any  line  of  commerce. 

HOLDING  COMPANY  OWNING  STOCK  OF  COMPETING 
CORPORATIONS  UNLAWFUL. 

No  corporation  shall  acquire,  directly  or  indirectly,  the  whole 
or  any  part  of  the  stock  or  other  share  capital  of  two  or  more 
corporations  engaged  in  commerce  where  the  effect  of  such  ac- 
quisition, or  the  use  of  such  stock  by  the  voting  or  granting  of 
proxies  or  otherwise,  may  be  to  substantially  lessen  competition 
between  such  corporations,  or  any  of  them,  whose  stock  or  other 
share  capital  is  so  acquired,  or  to  restrain  such  commerce  in  any 
section  or  community,  or  tend  to  create  a  monopoly  of  any  line 
of  commerce. 


TEXT  OF  CLAYTON  LAW.  263 

OWNERSHIP  OF  STOCK  FOR  INVESTMENT  ONLY, 
PERMITTED. 

This  section  shall  not  apply  to  corporations  purchasing  such 
stock  solely  for  investment  and  not  using  the  same  by  voting  or 
otherwise  to  bring  about,  or  in  attempting  to  bring  about,  the 
substantial  lessening  of  competition.  Nor  shall  anything  con- 
tained in  this  section  prevent  a  corporation  engaged  in  commerce 
from  causing  the  formation  of  subsidiary  corporations  for  the  ac- 
tual carrying  on  of  their  immediate  lawful  business,  or  the  nat- 
ural and  legitimate  branches  or  extensions  thereof,  or  from  own- 
ing and  holding  all  or  a  part  of  the  stock  of  such  subsidiary  cor- 
porations, whei>  the  effect  of  such  formation  is  not  to  substan- 
tially lessen  competition. 

COMMON  CARRIERS  PERMITTED  TO  OWN  STOCK  IN 
BRANCH  LINE  COMPANIES. 

Nor  shall  anything  herein  contained  be  construed  to  prohibit 
any  common  carrier  subject  to  the  laws  to  regulate  commerce 
from  aiding  in  the  construction  of  branches  or  short  lines  so  lo- 
cated as  to  become  feeders  to  the  main  line  of  the  company  so 
aiding  in  such  construction  or  from  acquiring  or  owning  all  or 
any  part  of  the  stock  of  such  branch  lines,  nor  to  prevent  any 
such  common  carrier  from  acquiring  and  owning  all  or  any  part 
of  the  stock  of  a  branch  or  short  line  constructed  by  an  independ- 
ent company  where  there  is  no  substantial  competition  between 
the  company  owning  the  branch  line  so  constructed  and  the  com- 
pany owning  the  main  line  acquiring  the  property  or  an  in- 
terest therein,  nor  to  prevent  such  common  carrier  from  ex- 
tending any  of  its  lines  through  the  medium  of  the  acquisition 
of  stock  or  otherwise  of  any  other  such  common  carrier  where 
there  is  no  substantial  competition  between  the  company  extend- 
ing its  lines  and  the  company  whose  stock,  property,  or  an  interest 
therein  is  so  acquired. 

LAWFUL  STOCK  OWNERSHIP  NOT  IMPAIRED. 

Nothing  contained  in  this  section  shall  be  held  to  affect  or  im- 
pair any  right  heretofore  legally  acquired :  Provided,  That  noth- 
ing in  this  section  shall  be  held  or  construed  to  authorize  or  make 
lawful  anything  heretofore  prohibited  or  made  illegal  by  the 
Anti-trust  laws,  nor  to  exempt  any  person  from  the  penal  pro- 
visions thereof  or  the  civil  remedies  therein  provided. 


264  MANUAL,  OF  FEDERAL  TRADE  COMMISSION. 

INTERLOCKING  BETWEEN  BANKS,  ONE  OF  WHICH 
HAS  $5,000,000  RESOURCES,  UNLAWFUL. 

SEC.  8.  That  from  and  after  two  years  from  the  date  of  the 
approval  of  this  act  no  person  shall  at  the  same  time  be  a  direc- 
tor or  other  officer  or  employee  of  more  than  one  bank,  banking 
association  or  trust  company,  organized  or  operating  under  the 
laws  of  the  United  States,  either  of  which  has  deposits,  capital, 
surplus,  and  undivided  profits  aggregating  more  than  $5,000,000; 
and  no  private  banker  or  person  who  is  a  director  in  any  bank 
or  trust  company,  organized  and  operating  under  the  laws  of  a 
State,  having  deposits,  capital,  surplus,  and  undivided  profits  ag- 
gregating more  than  $5,000,000,  shall  be  eligible  to  be  a  director 
in  any  bank  or  banking  association  organized  or  operating  under 
the  laws  of  the  United  States.  The  eligibility  of  a  director,  of- 
ficer, or  employee  under  the  foregoing  provisions  shall  be  deter- 
mined by  the  average  amount  of  deposits,  capital,  surplus,  and 
undivided  profits  as  shown  in  the  official  statements  of  such  bank, 
banking  association,  or  trust  company  filed  as  provided  by  law 
during  the  fiscal  year  next  preceding  the  date  set  for  the  annual 
election  of  directors,  and  when  a  director,  officer,  or  employee  has 
been  elected  or  selected  in  accordance  with  the  provisions  of  this 
act  it  shall  be  lawful  for  him  to  continue  as  such  for  one  year 
thereafter  under  said  election  or  employment. 

INTERLOCKING  BETWEEN  BANKS  IN  CITIES  OF  OVER 
200,000  POPULATION  PROHIBITED. 

No  bank,  banking  association  or  trust  company,  organized  or 
operating  under  the  laws  of  the  United  States,  in  any  city  or  in- 
corporated town  or  village  of  more  than  two  hundred  thousand 
inhabitants,  as  shown  by  the  last  preceding  decennial  census  of 
the  United  States,  shall  have  as  a  director  or  other  officer  or  em- 
ployee of  any  other  bank,  banking  association  or  trust  company 
located  in  the  same  place:  Provided,  That  nothing  in  this  sec- 
tion shall  apply  to  mutual  savings  banks  not  having  a  capital 
stock  represented  by  shares :  Provided  further,  That  a  director 
or  other  officer  or  employee  of  such  bank,  banking  association,  or 
trust  company  may  be  a  director  or  other  officer  or  employee  of 
not  more  than  one  other  bank  or  trust  company  organized  under 
the  laws  of  the  United  States  or  any  State  where  the  entire  cap- 
ital stock  of  one  is  owned  by  stockholders  in  the  other:  And 


TEXT  OF  CLAYTON  LAW.  265 

provided  further,  That  nothing  contained  in  this  section  shall 
forbid  a  director  of  class  A  of  the  Federal  reserve  bank,  as  de- 
fined in  the  Federal  Reserve  Act  from  being  an  officer  or  di- 
rector or  both  an  officer  and  director  in  one  member  bank. 

INTERLOCKING  BETWEEN  COMPETING  CORPORA- 
TIONS OF  MORE  THAN  $1,000,000  RESOURCES  UNLAWFUL. 

That  from  and  after  two  years  from  the  date  of  the  approval 
of  this  act  no  person  at  the  same  time  shall  be  a  director  in  any 
twcx  or  more  corporations,  any  one  of  which  has  capital,  surplus, 
and  undivided  profits  aggregating  more  than  $1,000,000,  en- 
gaged in  whole  or  in  part  in  commerce,  other  than  banks,  banking 
associations,  trust  companies  and  common  carriers  subject  to  the 
act  to  regulate  commerce,  approved  February  fourth,  eighteen 
hundred  and  eighty-seven,  if  such  corporations  are  or  shall  have 
been  theretofore,  by  virtue  of  their  business  and  location  of  oper- 
ation, competitors,  so  that  the  elimination  of  competition  by 
agreement  between  them  would  constitute  a  violation  of  any  of 
the  provisions  of  any  of  the  Anti-trust!  laws.  The  eligibility  of  a 
director  under  the  foregoing  provision  shall  be  determined  by  the 
aggregate  amount  of  the  capital,  surplus,  and  undivided  profits, 
exclusive  of  dividends  declared  but  not  paid  to  stockholders,  at 
the  end  of  the  fiscal  year  of  said  corporation  next  preceding  the 
election  of  directors,  and  when  a  director  has  been  elected  in  ac- 
cordance with  the  provisions  of  this  act  it  shall  be  lawful  for  him 
to  continue  as  such  for  one  year  thereafter. 

ELIGIBILITY   OF  INTERLOCKING  DIRECTORS. 

When  any  person  elected  or  chosen  as  a  director  or  officer  or 
selected  as  an  employee  of  any  bank  or  other  corporation  subject 
to  the  provisions  of  this  act  is  eligible  at  the  time  of  his  election 
or  selection  to  act  for  such  bank  or  other  corporation  in  such 
capacity  his  eligibility  to  act  in  such  capacity  shall  not  be  affected 
and  he  shall  not  become  or  be  deemed  amenable  to  any  of  the 
provisions  hereof  by  reason  of  any  change  in  the  affairs  of  such 
bank  or  other  corporation  from  whatsoever  cause,  whether  spe- 
cifically excepted  by  any  of  the  provisions  hereof  or  not,  until  the 
expiration  of  one  year  from  the  date  of  his  election  or  employ- 
ment. 


266  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

EMBEZZLEMENT  BY  COMMON  CARRIER  OFFICER  A 
FELONY. 

SEC.  9.  Every  president,  director,  officer,  or  manager  of  any 
firm,  association  or  corporation  engaged  in  commerce  as  a  com- 
mon carrier,  who  embezzles,  steals,  abstracts,  or  willfully  mis- 
applies, or  willfully  permits  to  be  misapplied,  any  of  the  moneys, 
funds,  credits,  securities,  property  or  assets  of  such  firm,  associa- 
tion or  corporation,  arising  or  accruing  from,  or  used  in,  such 
commerce,  in  whole  or  in  part,  or  willfully  or  knowingly  converts 
the  same  to  his  own  use  or  to  the  use  of  another,  shall  be  deemed 
guilty  of  a  felony  and  upon  conviction  shall  be  fined  not  less  than 
$500  or  confined  in  the  penitentiary  not  less  than  one  year  nor 
more  than  ten  years,  or  both,  in  the  discretion  of  the  court. 

CONVICTION  OR  ACQUITTAL  IN  STATE  COURT  ON 
SAME  OFFENSE  BARS  PROSECUTION  IN  FEDERAL 
COURT. 

Prosecutions  hereunder  may  be  in  the  district  court  of  the 
United  States  for  the  district  wherein  the  offence  may  have  been 
committed. 

That  nothing  in  this  section  shall  be  held  to  take  away  or  im- 
pair the  jurisdiction  of  the  courts  of  the  several  States  under  the 
laws  thereof;  and  a  judgment  of  conviction  or  acquittal  on  the 
merits  under  the  laws  of  any  State  shall  be  a  bar  to  any  prosecu- 
tion hereunder  for  the  same  act  or  acts. 

REGULATION  PRESCRIBED  FOR  COMMON  CARRIER  IN- 
TERLOCKING  WITH  CONSTRUCTION,  SUPPLY  OR  FINAN- 
CIAL CONCERNS. 

SEC.  10.  That  after  two  years  from  the  approval  of  this  act 
no  common  carrier  engaged  in  commerce  shall  have  any  dealings 
in  securities,  supplies  or  other  articles  of  commerce,  or  shall  make 
or  have  any  contracts  for  construction  or  maintenance  of  any 
kind,  to  the  amount  of  more  than  $50,000,  in  the  aggregate,  in 
any  one  year,  with  another  corporation,  firm,  partnership  or  asso- 
ciation when  the  said  common  carrier  shall  have  upon  its  board 
of  directors  or  as  its  president,  manager  or  as  its  purchasing  or 
selling  officer,  or  agent  in  the  particular  transaction,  any  person 
who  is  at  the  same  time  a  director,  manager,  or  purchasing  or 
selling  officer  of,  or  who  has  any  substantial  interest  in,  such 
other  corporation,  firm,  partnership  or  association,  unless  and 


TEXT  OP  CLAYTON  LAW.  267 

except  such  purchases  shall  be  made  from,  or  such  dealings  shall 
be  with,  the  bidder  whose  bid  is  the  most  favorable  to  such  com- 
mon carrier,  to  be  ascertained  by  competitive  bidding  under  regu- 
lations to  be  prescribed  by  rule  or  otherwise  by  the  Interstate 
Commerce  Commission.  No  bid  shall  be  received  unless  the 
name  and  address  of  the  bidder  or  the  names  and  addresses  of 
the  officers,  directors  and  general  managers  thereof,  if  the  bidder 
be  a  corporation,  or  of  the  members,  if  it  be  a  partnership  or 
firm,  be  given  with  the  bid. 

PENALTY  FOR  AVOIDING  REGULATIONS. 

Any  person  who  shall,  directly  or  indirectly,  do  or  attempt  to 
do  anything  to  prevent  anyone  from  bidding  or  shall  do  any  act 
to  prevent  free  and  fair  competition  among  the  bidders  or  those 
desiring  to  bid  shall  be  punished  as  prescribed  in  this  section  in 
the  case  of  an  officer  or  director. 

FURTHER  REGULATIONS  PRESCRIBED. 

Every  such  common  carrier  having  any  such  transactions  or 
making  any  such  purchases  shall  within  thirty  days  after  making 
the  same  file  with  the  Interstate  Commerce  Commission  a  full 
and  detailed  statement  of  the  transaction  showing  the  manner  of 
the  competitive  bidding,  who  were  the  bidders,  and  the  names  and 
addresses  of  the  directors  and  officers  of  the  corporations  and 
the  members  of  the  firm  or  partnership  bidding;  and  whenever 
the  said  Commission  shall,  after  investigation  or  hearing,  have 
reason  to  believe  that  the  law  has  been  violated  in  and  about  the 
said  purchases  or  transactions  it  shall  transmit  all  papers  and 
documents  and  its  own  views  or  findings  regarding  the  transac- 
tion to  the  Attorney-General. 

VIOLATION  OF  REGULATING  PROVISIONS  A  MISDE- 
MEANOR. 

If  any  common  carrier  shall  violate  this  section  it  shall  be 
fined  not  exceeding  $25,000;  and  every  such  director,  agent, 
manager  or  officer  thereof  who  shall  have  knowingly  voted  for  or 
directed  the  act  constituting  such  violation  or  who  shall  have 
aided  or  abetted  in  such  violation  shall  be  deemed  guilty  of  a  mis- 
demeanor and  shall  be  fined  not  exceeding  $5,000,  or  confined  in 
jail  not  exceeding  one  year,  or  both,  in  the  discretion  of  the  court. 


268  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

AUTHORITY  TO  ENFORCE  LAW  VESTED  IN  FEDERAL 
TRADE  COMMISSION,  INTERSTATE  COMMERCE  COMMIS- 
SION AND  FEDERAL  RESERVE  BOARD. 

SEC.  ii.  That  authority  to  enforce  compliance  with  Sections 
two,  three,  seven  and  eight  of  this  act  by  the  persons  respectively 
subject  thereto  is  hereby  vested:  in  the  Interstate  Commerce 
Commission  where  applicable  to  common  carriers,  in  the  Federal 
Reserve  Board  where  applicable  to  banks,  banking  associations 
and  trust  companies,  and  in  the  Federal  Trade  Commission  where 
applicable  to  all  other  character  of  commerce,  to  be  exercised  as 
follows : 

PROCEDURE  BEFORE  COMMISSION  OR  BOARD. 

Whenever  the  Commission  or  Board  vested  with  jurisdiction 
thereof  shall  have  reason  to  believe  that  any  person  is  violating 
or  has  violated  any  of  the  provisions  of  Sections  two,  three,  seven 
and  eight  of  this  act,  it  shall  issue  and  serve  upon  such  person  a 
complaint  stating  its  charges  in  that  respect,  and  containing  a 
notice  of  a  hearing  upon  a  day  and  at  a  place  therein  fixed  at 
least  thirty  days  after  the  service  of  said  complaint.  The  person 
so  complained  of  shall  have  the  right  to  appear  at  the  place  and 
time  so  fixed  and  show  cause  why  an  order  should  not  be  entered 
by  the  Commission  or  Board  requiring  such  person  to  cease  and 
desist  from  the  violation  of  the  law  so  charged  in  said  complaint. 
Any  person  may  make  application,  and  upon  good  cause  shown 
may  be  allowed  by  the  Commission  or  Board,  to  intervene  and  ap- 
pear in  said  proceeding  by  counsel  or  in  person.  The  testimony 
in  any  such  proceeding  shall  be  reduced  to  writing  and  filed  in  the 
office  of  the  Commission  or  Board.  If  upon  such  hearing  the 
Commission  or  Board,  as  the  case  may  be,  shall  be  of  the  opinion 
that  any  of  the  provisions  of  said  sections  have  been  or  are  being 
violated,  it  shall  make  a  report  in  writing  in  which  it  shall  state 
its  findings  as  to  the  facts,  and  shall  issue  and  cause  to  be  served 
on  such  person  an  order  requiring  such  person  to  cease  and  de- 
sist from  such  violations,  and  divest  itself  of  the  stock  held  or 
rid  itself  of  the  directors  chosen  contrary  to  the  provisions  of 
Sections  seven  and  eight  of  this  act,  if  any  there  be,  in  the  man- 
ner and  within  the  time  fixed  by  said  order.  Until  a  transcript 
of  the  record  in  such  hearing  shall  have  been  filed  in  a  Circuit 
Court  of  Appeals  of  the  United  States,  as  hereinafter  provided, 


TEXT  OF  CLAYTON  LAW.  269 

the  Commission  or  Board  may  at  any  time,  upon  such  notice  and 
in  such  manner  as  it  shall  deem  proper,  modify  or  set  aside,  in 
whole  or  in  part,  any  report  or  any  order  made  or  issued  by  it 
under  this  section. 

PROCEDURE  IN  COURT  TO  ENFORCE  COMMISSION'S 
OR  BOARD'S  ORDER. 

If  such  person  fails  or  neglects  to  obey  such  order  of  the  Com- 
mission or  Board  while  the  same  is  in  effect,  the  Commission  or 
Board  may  apply  to  the  Circuit  Court  of  Appeals  of  the  United 
States,  within  any  circuit  where  the  violation  complained  of  was 
or  is  being  committed  or  where  such  person  resides  or  carries  on 
business,  for  the  enforcement  of  its  order,  and  shall  certify  and 
file  with  its  application  a  transcript  of  the  entire  record  in  the 
proceeding,  including  all  the  testimony  taken  and  the  report  and 
order  of  the  Commission  or  Board.  Upon  such  filing  of  the  ap- 
plication and  transcript  the  court  shall  cause  notice  thereof  to  be 
served  upon  such  person  and  thereupon  shall  have  jurisdiction  of 
the  proceeding  and  of  the  question  determined  therein,  and  shall 
have  power  to  make  and  enter  upon  the  pleadings,  testimony,  and 
proceedings  set  forth  in  such  transcript  a  decree  affirming,  modi- 
fying, or  setting  aside  the  order  of  the  Commission  or  Board. 
The  findings  of  the  Commission  or  Board  as  to  the  facts,  if  sup- 
ported by  testimony,  shall  be  conclusive.  If  either  party  shall 
apply  to  the  court  for  leave  to  adduce  additional  evidence,  and 
shall  show  to  the  satisfaction  of  the  court  that  such  additional 
evidence  is  material  and  that  there  were  reasonable  grounds  for 
the  failure  to  adduce  such  evidence  in  the  proceeding  before  the 
Commission  or  Board,  the  court  may  order  such  additional  evi- 
dence to  be  taken  before  the  Commission  or  Board  and  to  be  ad- 
duced upon  the  hearing  in  such  manner  and  upon  such  terms  and 
conditions  as  to  the  court  may  seem  proper.  The  Commission  or 
Board  may  modify  its  findings  as  to  the  facts,  or  make  new 
findings,  by  reason  of  the  additional  evidence  so  taken,  and  it 
shall  file  such  modified  or  new  findings,  which,  if  supported  by 
testimony,  shall  be  conclusive,  and  its  recommendation,  if  any, 
for  the  modification  or  setting  aside  of  its  original  order,  with 
the  return  of  such  additional  evidence.  The  judgment  and  de- 
cree of  the  court  shall  be  final,  except  that  the  same  shall  be  sub- 
ject to  review  by  the  Supreme  Court  upon  certiorari  as  provided 
in  Section  two  hundred  and  forty  of  the  Judicial  Code. 


270  MANUAL  o?  FEDERAL  TRADE  COMMISSION. 

PROCEDURE  IN  COURT  TO  SET  ASIDE  COMMISSION'S 
OR  BOARD'S  ORDER. 

Any  party  required  by  such  order  of  the  Commission  or  Board 
to  cease  and  desist  from  a  violation  charged  may  obtain  a  re- 
view of  such  order  in  said  Circuit  Court  of  Appeals  by  filing  in 
the  court  a  written  petition  praying  that  the  order  of  the  Com- 
mission or  Board  be  set  aside.  A  copy  of  such  petition  shall  be 
forthwith  served  upon  the  Commission  or  Board,  and  thereupon 
the  Commission  or  Board  forthwith  shall  certify  and  file  in  the 
court  a  transcript  of  the  record  as  hereinbefore  provided.  Upon 
the  filing  of  the  transcript  the  court  shall  have  the  same  jurisdic- 
tion to  affirm,  set  aside,  or  modify  the  order  of  the  Commission 
or  Board  as  in  the  case  of  an  application  by  the  Commission  or 
Board  for  the  enforcement  of  its  order,  and  the  findings  of  the 
Commission  or  Board  as  to  the  facts,  if  supported  by  testimony, 
shall  in  like  manner  be  conclusive. 

CIRCUIT  COURT  OF  APPEALS  JURISDICTION  EX- 
CLUSIVE. 

The  jurisdiction  of  the  Circuit  Court  of  Appeals  of  the  United 
States  to  enforce,  set  aside,  or  modify  orders  of  the  Commission 
or  Board  shall  be  exclusive. 

EXPEDITION  OF  COURT  PROCEEDINGS— NO  ORDER  OR 
JUDGMENT  TO  RELIEVE  FROM  LIABILITY. 

Such  proceedings  in  the  Circuit  Court  of  Appeals  shall  be 
given  precedence  over  other  cases  pending  therein,  and  shall  be 
in  every  way  expedited.  No  order  of  the  Commission  or  Board 
or  the  judgment  of  the  court  to  enforce  the  same  shall  in  any 
wise  relieve  or  absolve  any  person  from  any  liability  under  the 
Anti-trust  acts. 

SERVICE  OF  PROCESS. 

Complaints,  orders,  and  other  processes  of  the  Commission  or 
Board  under  this  section  may  be  served  by  anyone  duly  author- 
ized by  the  Commission  or  Board,  either  (a)  by  delivering  a  copy 
thereof  to  the  person  to  be  served,  or  to  a  member  of  the  part- 
nership to  be  served,  or  to  the  president,  secretary,  or  other  ex- 
ecutive officer,  or  a  director  of  the  corporation  to  be  served ;  or 
(b)  by  leaving  a  copy  thereof  at  the  principal  office  or  place  of 


TEXT  os1  CLAYTON  LAW.  271 

business  of  such  person;  or  (c)  by  registering  and  mailing  a 
copy  thereof  addressed  to  such  person  at  his  principal  office  or 
place  of  business.  The  verified  return  by  the  person  so  serving 
said  complaint,  order,  or  other  process  setting  forth  the  manner 
of  said  service  shall  be  proof  of  the  same,  and  the  return  postr 
office  receipt  for  said  complaint,  order,  or  other  process  regis- 
tered and  mailed  as  aforesaid  shall  be  proof  of  the  service  of  the 
same. 

VENUE  OF  SUITS  AGAINST  CORPORATIONS. 

SEC.  12.  That  any  suit,  action,  or  proceeding  under  the  Anti- 
trust laws  against  a  corporation  may  be  brought  not  only  in  the 
judicial  district  whereof  it  is  an  inhabitant,  but  also  in  any  district 
wherein  it  may  be  found  or  transacts  business ;  and  all  process  in 
such  cases  may  be  served  in  the  district  of  which  it  is  an  inhabi- 
tant, or  wherever  it  may  be  found. 

SUBPCENAS  MAY  RUN  INTO  ANY  DISTRICT. 

SEC.  13.  That  in  any  suit,  action,  or  proceeding  brought  by  or 
on  behalf  of  the  United  States  subpoenas  for  witnesses  who  are 
required  to  attend  a  court  of  the  United  States  in  any  judicial 
district  in  any  case,  civil  or  criminal,  arising  under  the  Anti-trust 
laws  may  run  into  any  other  district:  Provided,  That  in  civil 
cases  no  writ  of  subpoena  shall  issue  for  witnesses  living  out  of 
the  district  in  which  the  court  is  held  at  a  greater  distance  than 
one  hundred  miles  from  the  place  of  holding  the  same  without 
the  permission  of  the  trial  court  being  first  had  upon  proper  ap- 
plication and  cause  shown. 

CRIME  OF  CORPORATION  ALSO  THAT  OF  ITS  DIREC- 
TORS, OFFICERS  AND  AGENTS. 

SEC.  14.  That  whenever  a  corporation  shall  violate  any  of  the 
penal  provisions  of  the  Anti-trust  laws,  such  violation  shall  be 
deemed  to  be  also  that  of  the  individual  directors,  officers,  or 
agents  of  such  corporation  who  shall  have  authorized,  ordered, 
or  done  any  of  the  acts  constituting  in  whole  or  in  part  such  vio- 
lation, and  such  violation  shall  be  deemed  a  misdemeanor,  and 
upon  conviction  therefor  of  any  such  director,  officer,  or  agent  he 
shall  be  punished  by  a  fine  of  not  exceeding  $5,000  or  by  impris- 
onment for  not  exceeding  one  year,  or  by  both,  in  the  discretion 
of  the  court. 


272  MANUAL  of  FEDERAL  TRADE  COMMISSION. 

SUITS  IN  EQUITY  BY  UNITED  STATES  AUTHORIZED 
TO  RESTRAIN  VIOLATIONS. 

SEC.  15.  That  the  several  district  courts  of  the  United  States 
are  hereby  invested  with  jurisdiction  to  prevent  and  restrain  vio- 
lations of  this  act,  and  it  shall  be  the  duty  of  the  several  district 
attorneys  of  the  United  States,  in  their  respective  districts,  under 
the  direction  of  the  Attorney  General,  to  institute  proceedings  in 
equity  to  prevent  and  restrain  such  violations.  Such  proceedings 
may  be  by  way  of  petition  setting  forth  the  case  and  praying  that 
such  violation  shall  be  enjoined  or  otherwise  prohibited.  When 
the  parties  complained  of  shall  have  been  duly  notified  of  such 
petition,  the  court  shall  proceed,  as  soon  as  may  be,  to  the  hear- 
ing and  determination  of  the  case;  and  pending  such  petition, 
and  before  final  decree,  the  court  may  at  any  time  make 
such  temporary  restraining  order  or  prohibition  as  shall  be 
deemed  just  in  the  premises.  Whenever  it  shall  appear  to  the 
court  before  which  any  such  proceeding  may  be  pending  that  the 
ends  of  justice  require  that  other  parties  should  be  brought  be- 
fore the  court,  the  court  may  cause  them  to  be  summoned  wheth- 
er they  reside  in  the  district  in  which  the  court  is  held  or  not, 
and  subpoenas  to  that  end  may  be  served  in  any  district  by  the 
marshal  thereof. 

PERSON  MAY  ENJOIN  THREATENED  DAMAGES  BY  VIO- 
LATIONS. 

SEC.  16.  That  any  person,  firm,  corporation,  or  association 
shall  be  entitled  to  sue  for  and  have  injunctive  relief,  in  any  court 
of  the  United  States  having  jurisdiction  over  the  parties,  against 
threatened  loss  or  damage  by  a  violation  of  the  Anti-trust  laws, 
including  Sections  two,  three,  seven  and  eight  of  this  act,  when 
and  under  the  same  conditions  and  principles  as  injunctive  relief 
against  threatened  conduct  that  will  cause  loss  or  damage  is 
granted  by  courts  of  equity,  under  the  rules  governing  such  pro- 
ceedings, and  upon  the  execution  of  proper  bond  against  damages 
for  an  injunction  improvidently  granted  and  a  showing  that  the 
danger  of  irreparable  loss  or  damage  is  immediate,  a  prelim- 
inary injunction  may  issue :  Provided,  That  nothing  herein  con- 
tained shall  be  construed  to  entitle  any  person,  firm,  corporation, 
or  association,  except  the  United  States,  to  bring  suit  in  equity 
for  injunctive  relief  against  any  common  carrier  subject  to  the 


TEXT  OF  CLAYTON  LAW.  273 

provisions  of  the  act  to  regulate  commerce,  approved  February 
fourth,  eighteen  hundred  and  eighty-seven,  in  respect  of  any 
matter  subject  to  the  regulation,  supervision,  or  other  jurisdic- 
tion of  the  Interstate  Commerce  Commission. 

NO  PRELIMINARY  INJUNCTION  WITHOUT  NOTICE. 

SEC.  17.  That  no  preliminary  injunction  shall  be  issued  without 
notice  to  the  opposite  party. 

NO  TEMPORARY  RESTRAINING  ORDER  WITHOUT  NO- 
TICE UNLESS  IRREPARABLE  INJURY  SHOWN. 

No  temporary  restraining  order  shall  be  granted  without  no- 
tice to  the  opposite  party  unless  it  shall  clearly  appear  from 
specific  facts  shown  by  affidavit  or  by  the  verified  bill  that  imme- 
diate and  irreparable  injury,  loss,  or  damage  will  result  to  the 
applicant  before  notice  can  be  served  and  a  hearing  had  thereon. 
Every  such  temporary  restraining  order  shall  be  indorsed  with 
the  date  and  hour  of  issuance,  shall  be  forthwith  filed  in  the 
clerk's  office  and  entered  of  record,  shall  define  the  injury  and 
state  why  it  is  irreparable  and  why  the  order  was  granted  with- 
out notice,  and  shall  by  its  terms  expire  within  such  time  after 
entry,  not  to  exceed  ten  days,  as  the  court  or  judge  may  fix,  un- 
less within  the  time  so  fixed  the  order  is  extended  for  a  like 
period  for  good  cause  shown,  and  the  reasons  for  such  extension 
shall  be  entered  of  record.  In  case  a  temporary  restraining  order 
shall  be  granted  without  notice  in  the  contingency  specified, 
the  matter  of  the  issuance  of  a  preliminary  injunction  shall  be 
set  down  for  a  hearing  at  the  earliest  possible  time  and  shall  take 
precedence  of  all  matters  except  older  matters  of  the  same  char- 
acter; and  when  the  same  comes  up  for  hearing  the  party  ob- 
taining the  temporary  restraining  order  shall  proceed  with  the  ap- 
plication for  a  preliminary  injunction,  and  if  he  does  not  do  so 
the  court  shall  dissolve  the  temporary  restraining  order.  Upon 
two  days  notice  to  the  party  obtaining  such  temporary  restrain- 
ing order  the  opposite  party  may  appear  and  move  the  dissolution 
or  modification  of  the  order,  and  in  that  event  the  court  or  judge 
shall  proceed  to  hear  and  determine  the  motion  as  expeditiously 
as  the  ends  of  justice  may  require. 


18 


274  MANUAL  of  FEDERAL  TRADE  COMMISSION. 

SECTION  263  OF  JUDICIARY  ACT  REPEALED. 

Section  two  hundred  and  sixty-three  of  an  act  entitled  "An  act 
to  codify,  revise,  and  amend  the  laws  relating  to  the  judiciary," 
approved  March  third,  nineteen  hundred  and  eleven,  is  hereby 
repealed. 

SECTION  266  OF  JUDICIARY  ACT  NOT  AMENDED. 

Nothing  in  this  section  contained  shall  be  deemed  to  alter,  re- 
peal, or  amend  Section  two  hundred  and  sixty-six  of  an  act  en- 
titled "An  act  to  codify,  revise,  and  amend  the  laws  relating  to  the 
judiciary,"  approved  March  third,  nineteen  hundred  and  eleven. 

INJUNCTION  BOND  REQUIRED. 

SEC.  1 8.  That,  except  as  otherwise  provided  in  Section  16  of 
this  act,  no  restraining  order  or  interlocutory  order  of  injunction 
shall  issue,  except  upon  the  giving  of  security  by  the  applicant  in 
such  sum  as  the  court  or  judge  may  deem  proper,  conditioned 
upon  the  payment  of  such  costs  and  damages  as  may  be  incurred 
or  suffered  by  any  party  who  may  be  found  to  have  been  wrong- 
fully enjoined  or  restrained  thereby. 

INJUNCTION  ORDER  SHALL  BE  SPECIFIC. 

SEC.  19.  That  every  order  of  injunction  or  restraining  order 
shall  set  forth  the  reasons  for  the  issuance  of  the  same,  shall  be 
specific  in  terms,  and  shall  describe  in  reasonable  detail,  and  not 
by  reference  to  the  bill  of  complaint  or  other  document,  the  act 
or  acts  sought  to  be  restrained,  and  shall  be  binding  only  upon  the 
parties  to  the  suit,  their  officers,  agents,  servants,  employees,  and 
attorneys,  or  those  in  active  concert  or  participating  with  them, 
and  who  shall,  by  personal  service  or  otherwise,  have  received  ac- 
tual notice  of  the  same. 

NO  INJUNCTION  ORDER  PERMITTED  IN  CASES  BE- 
TWEEN  EMPLOYER  AND  EMPLOYEES,  ETC. 

SEC.  20.  That  no  restraining  order  or  injunction  shall  be 
granted  by  any  court  of  the  United  States,  or  a  judge  or  the 
judges  thereof,  in  any  case  between  an  employer  and  employees, 
or  between  employers  and  employees,  or  between  employees,  or 
between  persons  employed  and  persons  seeking  employment,  in- 


TEXT  OP  CLAYTON  LAW.  275 

volving,  or  growing  out  of,  a  dispute  concerning  terms  or  condi- 
tions of  employment,  unless  necessary  to  prevent  irreparable  in- 
jury to  property,  or  to  a  property  right,  of  the  party  making  the 
application,  for  which  injury  there  is  no  adequate  remedy  at  law, 
and  such  property  or  property  right  must  be  described  with 
particularity  in  the  application,  which  must  be  in  writing  and 
sworn  to  by  the  applicant  or  by  his  agent  or  attorney. 

PEACEFUL  PERSUASION  OF  EMPLOYEES  NOT  TO  BE 
ENJOINED. 

And  no  such  restraining  order  or  injunction  shall  prohibit  any 
person  or  persons,  whether  singly  or  in  concert,  from  terminating 
any  relation  of  employment,  or  from  ceasing  to  perform  any 
work  or  labor,  or  from  recommending,  advising,  or  persuading 
others  by  peaceful  means,  so  to  do;  or  from  attending  at  any 
place  where  any  such  person  or  persons  may  lawfully  be,  for  the 
purpose  of  peacefully  obtaining  or  communicating  information, 
or  from  peacefully  persuading  any  person  to  work  or  to  abstain 
from  working;  or  from  ceasing  to  patronize  or  to  employ  any 
party  to  such  dispute,  or  from  recommending,  advising,  or  per- 
suading others  by  peaceful  and  lawful  means  so  to  do ;  or  from 
paying  or  giving  to,  or  withholding  from,  any  person  engaged  in 
such  dispute,  any  strike  benefits  or  other  moneys  or  things  of 
value;  or  from  peaceably  assembling  in  a  lawful  manner,  and 
for  lawful  purposes ;  or  from  doing  any  act  or  thing  which  might 
lawfully  be  done  in  the  absence  of  such  dispute  by  any  party 
thereto ;  nor  shall  any  of  the  acts  specified  in  this  paragraph  be 
considered  or  held  to  be  violations  of  any  law  of  the  United 
States. 

DISOBEDIENCE  OF  COURT  ORDER  BY  CRIMINAL  ACT 
PUNISHABLE. 

SEC.  21.  That  any  person  who  shall  willfully  disobey  any  law- 
ful writ,  process,  order,  rule,  decree,  or  command  of  any  district 
court  of  the  United  States  or  any  court  of  the  District  of  Colum- 
bia by  doing  any  act  or  thing  therein,  or  thereby  forbidden  to  be 
done  by  him,  if  the  act  or  thing  so  done  by  him  be  of  such  char- 
acter as  to  constitute  also  a  criminal  offence  under  any  statute  of 
the  United  States,  or  under  the  laws  of  any  State  in  which  the  act 
was  committed,  shall  be  proceeded  against  for  his  said  contempt 
as  hereinafter  provided. 


276  MANUAL  OF  FEDERAL  TRADE;  COMMISSION, 

PROCEEDINGS  IN  CONTEMPT  CASES. 

SEC.  22.  That  whenever  it  shall  be  made  to  appear  to  any  dis- 
trict court  or  judge  thereof,  or  to  any  judge  therein  sitting,  by 
the  return  of  a  proper  officer  on  lawful  process,  or  upon  the  affi- 
davit of  some  credible  person,  or  by  information  filed  by  any  dis- 
trict attorney,  that  there  is  reasonable  ground  to  believe  that  any 
person  has  been  guilty  of  such  contempt,  the  court  or  judge  there- 
of, or  any  judge  therein  sitting,  may  issue  a  rule  requiring  the 
said  person  so  charged  to  show  cause  upon  a  day  certain  why  he 
should  not  be  punished  therefor,  which  rule,  together  with  a 
copy  of  the  affidavit  or  information,  shall  be  served  upon  the  per- 
son charged,  with  sufficient  promptness  to  enable  him  to  prepare 
for  and  make  return  to  the  order  at  the  time  fixed  therein.  If 
upon  or  by  such  return,  in  the  judgment  of  the  court,  the  alleged 
contempt  be  not  sufficiently  purged,  a  trial  shall  be  directed  at  a 
time  and  place  fixed  by  the  court :  Provided,  however,  That  if 
the  accused,  being  a  natural  person,  fail  or  refuse  to  make  return 
to  the  rule  to  show  cause,  an  attachment  may  issue  against  his 
person  to  compel  an  answer,  and  in  case  of  his  continued  failure 
or  refusal,  or  if  for  any  reason  it  be  impracticable  to  dispose  of 
the  matter  on  the  return  day,  he  may  be  required  to  give  reason- 
able bail  for  his  attendance  at  the  trial  and  his  submission  to  the 
final  judgment  of  the  court.  Where  the  accused  is  a  body  cor- 
porate, an  attachment  for  the  sequestration  of  its  property  may 
be  issued  upon  like  refusal  or  failure  to  answer. 

JURY  TRIAL  IF  DEMANDED. 

In  all  cases  within  the  purview  of  this  act  such  trial  may  be 
by  the  court,  or,  upon  demand  of  the  accused,  by  a  jury;  in 
which  latter  event  the  court  may  impanel  a  jury  from  the  jurors 
then  in  attendance,  or  the  court  or  the  judge  thereof  in  chambers, 
may  cause  a  sufficient  number  of  jurors  to  be  selected  and  sum- 
moned, as  provided  by  law,  to  attend  at  the  time  and  place  of 
trial,  at  which  time  a  jury  shall  be  selected  and  impaneled  as  upon 
a  trial  for  misdemeanor;  and  such  trial  shall  conform,  as  near 
as  may  be,  to  the  practice  in  criminal  cases  prosecuted  by  indict- 
ment or  upon  information. 

PUNISHMENT— DISTRIBUTION  OF  FINE. 

If  the  accused  be  found  guilty,  judgment  shall  be  entered  ac- 
cordingly, prescribing  the  punishment,  either  by  fine  or  imprison" 


TEXT  OF  CLAYTON  LAW.  277 

ment,  or  both,  in  the  discretion  of  the  court.  Such  fine  shall  be 
paid  to  the  United  States  or  to  the  complainant  or  other  party  in- 
jured by  the  act  constituting  the  contempt,  or  may,  where  more 
than  one  is  so  damaged,  be  divided  or  apportioned  among  them  as 
the  court  may  direct,  but  in  no  case  shall  the  fine  to  be  paid  to 
the  United  States  exceed,  in  case  the  accused  is  a  natural  person, 
the  sum  of  $1,000,  nor  shall  such  imprisonment  exceed  the  term 
of  six  months :  Provided,  That  in  any  case  the  court  or  a  judge 
thereof  may,  for  good  cause  shown,  by  affidavit  or  proof  taken  in 
open  court  or  before  such  judge  and  filed  with  the  papers  in  the 
case,  dispense  with  the  rule  to  show  cause,  and  may  issue  an  at- 
tachment for  the  arrest  of  the  person  charged  with  contempt; 
in  which  event  such  person,  when  arrested,  shall  be  brought  be- 
fore such  court  or  a  judge  thereof  without  unnecessary  delay 
and  shall  be  admitted  to  bail  in  a  reasonable  penalty  for  his  ap- 
pearance to  answer  to  the  charge  or  for  trial  for  the  contempt ; 
and  thereafter  the  proceedings  shall  be  the  same  as  provided 
herein  in  case  the  rule  had  issued  in  the  first  instance. 

REVIEW  PROVIDED  FOR  CONTEMPT  PROCEEDINGS- 
BAIL. 

SEC.  23.  That  the  evidence  taken  upon  the  trial  of  any  persons 
so  accused  may  be  preserved  by  bill  of  exceptions,  and  any  judg- 
ment of  conviction  may  be  reviewed  upon  writ  of  error  in  all  re- 
spects as  now  provided  by  law  in  criminal  cases,  and  may  be  af- 
firmed, reversed,  or  modified  as  justice  may  require.  Upon  the 
granting  of  such  writ  of  -error,  execution  of  judgment  shall  be 
stayed,  and  the  accused,  if  thereby  sentenced  to  imprisonment, 
shall  be  admitted  to  bail  in  such  reasonable  sum  as  may  be  re- 
quired by  the  court,  or  by  any  justice,  or  any  judge  of  any  district 
court  of  the  United  States  or  any  court  of  the  District  of  Colum- 
bia. 

CONTEMPT  PROCEEDINGS  NOT  APPLICABLE  IN  CER- 
TAIN CASES. 

SEC.  24.  That  nothing  herein  contained  shall  be  construed  to 
relate  to  contempts  committed  in  the  presence  of  the  court,  or 
so  near  thereto  as  to  obstruct  the  administration  of  justice,  nor 
to  contempts  committed  in  disobedience  of  any  lawful  writ, 
process,  order,  rule  decree  or  command  entered  in  any  suit  or  ac- 


278  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

tion  brought  or  prosecuted  in  the  name  of,  or  on  behalf  of,  the 
United  States  but  the  same,  and  all  other  cases  of  contempt  not 
specifically  embraced  within  Section  twenty-one  of  this  act,  may 
be  punished  in  conformity  to  the  usages  at  law  and  in  equity  now 
prevailing. 

LIMITATIONS  IN  CONTEMPT  ACTIONS  ONE  YEAR. 

SEC.  25.  That  no  proceeding  for  contempt  shall  be  instituted 
against  any  person  unless  begun  within  one  year  from  the  date 
of  the  act  complained  of;  nor  shall  any  such  proceeding  be  a 
bar  to  any  criminal  prosecution  for  the  same  act  or  acts;  but 
nothing  herein  contained  shall  affect  any  proceedings  in  contempt 
pending  at  the  time  of  the  passage  of  this  act. 

CONSTITUTIONAL  SAVING  CLAUSE. 

SEC.  26.  If  any  clause,  sentence,  paragraph,  or  part  of  this  act 
shall  for  any  reason  be  adjudged  by  any  court  of  competent 
jurisdiction  to  be  invalid,  such  judgment  shall  not  effect,  impair, 
or  invalidate  the  remainder  thereof,  but  shall  be  confined  in  its 
operation  to  the  clause,  sentence,  paragraph,  or  part  thereof  di- 
rectly involved  in  the  controversy  in  which  such  judgment  shall 
have  been  rendered. 

Approved,  October  15,  1914, 


APPENDIX  C. 

SHERMAN  LAW,  OR  FEDERAL  ANTI-TRUST  LAW. 

(Act  of  July  2,  1890;  26  Stat.  209.) 

An  act  to  protect  trade  and  commerce  against  unlawful  re- 
straints and  monopolies. 

CONTRACTS,  COMBINATIONS  OR  CONSPIRACIES  IN  RE- 
STRAINT OF  TRADE  ILLEGAL. 

SEC.  i.  Be  it  enacted  by  the  Senate  and  House  of  Representa- 
tives of  the  United  States  of  America  in  Congress  assembled. 
Every  contract  combination  in  the  form  of  a  trust  or  otherwise,  or 
conspiracy,  in  restraint  of  trade  or  commerce  among  the  several 
States,  or  with  foreign  nations,  is  hereby  declared  to  be  illegal. 
Every  person  who  shall  make  any  such  contract  or  engage  in  any 
such  combination  or  conspiracy,  shall  be  deemed  guilty  of  a  mis- 
demeanor, and,  on  conviction  thereof,  shall  be  punished  by  fine 
not  exceeding  five  thousand  dollars,  or  by  imprisonment  not  ex- 
ceeding one  year,  or  by  both  said  punishments,  in  the  discretion  of 
the  court. 

MONOPOLIZING  OR  ATTEMPTING  TO  MONOPOLIZE 
TRADE  A  MISDEMEANOR. 

SEC.  2.  Every  person  who  shall  monopolize,  or  attempt  to 
monopolize,  or  combine  or  conspire  with  any  other  person  or 
persons,  to  monopolize  any  part  of  the  trade  or  commerce  among 
the  several  States,  or  with  foreign  nations,  shall  be  deemed  guilty 
of  a  misdemeanor,  and,  on  conviction  thereof,  shall  be  punished 
by  fine  not  exceeding  five  thousand  dollars,  or  by  imprisonment 
not  exceeding  one  year,  or  by  both  said  punishments,  in  the  dis- 
cretion of  the  court. 

CONTRACTS,  ETC.,  IN  RESTRAINT  OF  TRADE  ILLEGAL. 

SEC.  3.  Every  contract,  combination  in  form  of  trust  or  other- 
wise, or  conspiracy,  in  restraint  of  trade  or  commerce  in  any 
Territory  of  the  United  States  or  of  the  District  of  Columbia,  or 
in  restraint  of  trade  or  commerce  between  any  such  Territory  and 

279 


280  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

another,  or  between  any  such  Territory  or  Territories  and  any 
State  or  States  or  the  District  of  Columbia,  or  with  foreign  na- 
tions, or  between  the  District  of  Columbia  and  any  State  or  States 
or  foreign  nations,  is  hereby  declared  illegal.  Every  person  who 
shall  make  any  such  contract  or  engage  in  any  such  combination 
or  conspiracy,  shall  be  deemed  guilty  of  a  misdemeanor,  and,  on 
conviction  thereof  shall  be  punished  by  fine  not  exceeding  five 
thousand  dollars,  or  by  imprisonment  not  exceeding  one  year,  or 
by  both  said  punishments,  in  the  discretion  of  the  court. 

JURISDICTION  TO  RESTRAIN  VIOLATIONS. 

SEC.  4.  That  several  circuit  courts  of  the  United  States  are 
hereby  invested  with  jurisdiction  to  prevent  and  restrain  viola- 
tions of  this  act;  and  it  shall  be  the  duty  of  the  several  district 
attorneys  of  the  United  States,  in  their  respective  districts,  under 
the  direction  of  the  Attorney  General,  to  institute  proceedings  in 
equity  to  prevent  and  restrain  such  violations.  Such  proceedings 
may  be  by  way  of  petition  setting  forth  the  case  and  praying  that 
such  violation  shall  be  enjoined  or  othenvise  prohibited.  When 
the  parties  complained  of  shall  have  been  duly  notified  of  such 
petition  the  court  shall  proceed,  as  soon  as  may  be,  to  the  hearing 
and  determination  of  the  case ;  and  pending  such  petition  and  be- 
fore final  decree,  the  court  may  at  any  time  make  such  temporary 
restraining  order  or  prohibition  as  shall  be  deemed  just  in  the 
premises. 

OTHER  PARTIES  MAY  BE  SUMMONED. 

SEC.  5.  Whenever  it  shall  appear  to  the  court  before  which 
any  proceeding  under  section  four  of  this  act  may  be  pending, 
that  the  ends  of  justice  require  that  other  parties  should  be 
brought  before  the  court,  the  court  may  cause  them  to  be  sum- 
moned, whether  they  reside  in  the  district  in  which  the  court  is 
held  or  not ;  and  subpoenas  to  that  end  may  be  served  in  any  dis- 
trict by  the  marshal  thereof. 

PROPERTY  OWNED  IN  VIOLATION  OF  LAW  MAY  BE 
CONDEMNED. 

SEC.  6.  Any  property  owned  under  any  contract  or  by  any 
combination,  or  pursuant  to  any  conspiracy  (and  being  the  sub- 
ject thereof)  mentioned  in  section  one  of  this  act,  and  being  in 


SHERMAN  LAW  DECISIONS.  281 

the  course  of  transportation  from  one  State  to  another,  or  to 
a  foreign  country,  shall  be  forfeited  to  the  United  States,  and 
may  be  seized  and  condemned  by  like  proceedings  as  those  pro- 
vided by  law  for  the  forfeiture,  seizure,  and  condemnation  of 
property  imported  into  the  United  States  contrary  to  law. 

INJURED  PERSON  GIVEN  RIGHT  TO  RECOVER  THREE- 
FOLD DAMAGES. 

SEC.  7.  Any  person  who  shall  be  injured  in  his  business  or 
property  by  any  other  person  or  corporation  by  reason  of  any- 
thing forbidden  or  declared  to  be  unlawful  by  this  act,  may  sue 
therefor  in  an  circuit  court  of  the  United  States  in  the  district  in 
which  the  defendant  resides  or  is  found,  without  respect  to  the 
amount  in  controversy,  and  shall  recover  threefold  the  damages 
by  him  sustained,  and  the  costs  of  suit,  including  a  reasonable  at- 
torney's fee. 

PERSON  DEFINED. 

SEC.  8.  That  the  word  "person,"  or  "persons"  wherever  used 
in  this  act  shall  be  deemed  to  include  corporations  and  associa- 
tions existing  under  or  authorized  by  the  laws  of  either  the  United 
States,  the  laws  of  any  of  the  Territories,  the  laws  of  any  State, 
or  the  laws  of  any  foreign  country. 


APPENDIX  D. 
PORTIONS  OF  WILSON  TARIFF  LAW. 

[Act  of  August  27,  1894  (28  Stat.  570)  as  amended  by  Act  of 
February  12,  1913  (37  Stat.  667).] 

Applicable  to  regulation  of  import  trade  only,  being  Sections 
73  as  amended,  74,  75,  76  as  amended,  and  77. 

CONTRACTS,  ETC.,  IN  RESTRAINT  OF  IMPORT  TRADE 
ILLEGAL. 

SEC.  73.  That  every  combination,  conspiracy,  trust,  agreement, 
or  contract,  is  hereby  declared  to  be  contrary  to  public  policy,  il- 
legal, and  void  when  the  same  is  made  by  or  between  two  or  more 
persons  or  corporations  either  of  whom,  as  agent  or  principal,  is 
engaged  in  importing  any  article  from  any  foreign  country  into 
the  United  States,  and  when  such  combination,  conspiracy,  trust, 
agreement,  or  contract  is  intended  to  operate  in  restraint  of  law- 
ful trade,  or  free  competition  in  lawful  trade  or  commerce,  or  to 
increase  the  market  price  in  any  part  of  the  United  States  of  any 
article  or  articles  imported  or  intended  to  be  imported  into  the 
United  States,  or  of  any  manufacture  into  which  such  imported 
article  enters  or  is  intended  to  enter.  Every  person  who  is  or 
shall  hereafter  be  engaged  in  the  importation  of  goods  or  any 
commodity  from  any  foreign  country  in  violation  of  this  section 
of  this  act,  or  who  shall  combine  or  conspire  with  another  to 
violate  the  same,  is  guilty  of  a  misdemeanor,  and  on  conviction 
thereof  in  any  court  of  the  United  States  such  person  shall  be 
fined  in  a  sum  not  less  than  one  hundred  dollars  and  not  exceed- 
ing five  thousand  dollars,  and  shall  be  further  punished  by  im- 
prisonment, in  the  discretion  of  the  court,  for  a  term  not  less  than 
three  months  nor  exceeding  twelve  months. 

JURISDICTION  TO  RESTRAIN  VIOLATIONS. 

SEC.  74.  That  the  several  circuit  courts  of  the  United  States 
are  hereby  invested  with  jurisdiction  to  prevent  and  restrain  vio- 
lations of  Section  seventy-three  of  this  act;  and  it  shall  be  the 
duty  of  the  several  district  attorneys  of  the  United  States,  in 
their  respective  districts,  under  the  direction  of  the  Attorney- 
General,  to  institute  proceedings  in  equity  to  prevent  and  restrain 

282 


APPENDIX  D.  283 

such  violations.  Such  proceedings  may  be  by  way  of  petitions 
setting  forth  the  case  and  praying  that  such  violations  shall  be  en- 
joined or  otherwise  prohibited.  When  the  parties  complained  of, 
shall  have  been  duly  notified  of  such  petition  the  court  shall  pro- 
ceed, as  soon  as  may  be,  to  the  hearing  and  determination  of  the 
case ;  and  pending  such  petition  and  before  final  decree,  the  court 
may  at  any  time  make  such  temporary  restraining  order  or  pro- 
hibition as  shall  be  deemed  just  in  the  premises. 

ADDITIONAL  PARTIES  MAY  BE  SUMMONED  FROM 
OTHER  DISTRICTS. 

SEC.  75.  That  whenever  it  shall  appear  to  the  court  before 
which  any  proceeding  under  the  Seventy-fourth  section  of  this 
act  may  be  pending  that  the  ends  of  justice  require  that  other 
parties  should  be  brought  before  the  court,  the  court  may  cause 
them  to  be  summoned,  whether  they  reside  in  the  district  in 
which  the  court  is  held  or  not ;  and  subpoenas  to  that  end  may  be 
served  in  any  district  by  the  marshal  thereof. 

PROPERTY  OWNED  IN  VIOLATION  OF  LAW  MAY  BE 
CONDEMNED. 

SEC.  76.  That  any  property  owned  under  any  contract  or  by 
any  combination,  or  pursuant  to  any  conspiracy,  and  being  the 
subject  thereof,  mentioned  in  Section  seventy-three  of  this  act, 
imported  into  and  being  within  the  United  States  or  being  in  the 
course  of  transportation  from  one  State  to  another,  or  to  or  from 
a  Territory  or  the  District  of  Columbia,  shall  be  forfeited  to  the 
United  States,  and  may  be  seized  and  condemned  by  like  pro- 
ceedings as  those  provided  by  law  for  the  forfeiture,  seizure,  and 
condemnation  of  property  imported  into  the  United  States  con- 
trary to  law. 

INJURED  PERSON  GIVEN  RIGHT  TO  RECOVER  THREE- 
FOLD DAMAGES. 

SEC.  77.  That  any  person  who  shall  be  injured  in  his  business 
or  property  by  any  other  person  or  corporation  by  reason  of  any- 
thing forbidden  or  declared  to  be  unlawful  by  this  act,  may  sue 
therefor  in  any  circuit  court  of  the  United  States  in  the  district 
in  which  the  defendant  resides  or  is  found,  without  respect  to 
the  amount  in  controversy,  and  shall  recover  threefold  the  dam- 
ages by  him  sustained,  and  the  cost  of  suit,  including  a  reasonable 
attorney's  fee. 


APPENDIX  E. 

STATUTORY  PROVISIONS  CREATING  THE  BUREAU 
OF  CORPORATIONS. 

[32  Stat,  825,  827.] 

AN  ACT  to  establish  the  Department  of  Commerce  and  Labor. 
***** 

SEC.  6.  That  there  shall  be  in  the  Department  of  Commerce 
and  Labor  a  bureau  to  be  called  the  Bureau  of  Corporations,  and 
a  Commissioner  of  Corporations  who  shall  be  the  head  of  said 
bureau,  to  be  appointed  by  the  President,  who  shall  receive  a 
salary  of  five  thousand  dollars  per  annum.  There  shall  also  be  in 
said  bureau  a  deputy  commissioner,  who  shall  receive  a  salary 
of  three  thousand  five  hundred  dollars  per  annum  and  who  shall 
in  the  absence  of  the  commissioner,  act  as  and  perform  the 
duties  of  the  Commissioner  of  Corporations,  and  who  shall  also 
perform  such  other  duties  as  may  be  assigned  to  him  by  the 
Secretary  of  Commerce  and  Labor  or  by  the  said  commissioner. 
There  shall  also  be  in  the  said  bureau  a  chief  clerk  and  such 
special  agents,  clerks,  and  other  employees  as  may  be  authorized 
by  law. 

The  said  commissioner  shall  have  power  and  authority  to  make, 
under  the  direction  and  control  of  the  Secretary  of  Commerce 
and  Labor,  diligent  investigation  into  the  organization,  conduct, 
and  management  of  the  business  of  any  corporation,  joint  stock 
company,  or  corporate  combination  engaged  in  commerce  among 
the  several  States  and  with  foreign  nations,  excepting  common 
carriers  subject  to  "An  act  to  regulate  commerce,"  approved  Feb- 
ruary fourth,  eighteen  hundred  and  eighty-seven,  and  to  gather 
such  information  and  data  as  will  enable  the  President  of  the 
United  States  to  make  recommendations  to  Congress  for  legisla- 
tion for  the  regulation  of  such  commerce,  and  to  report  such  data 
to  the  President  from  time  to  time  as  he  shall  require ;  and  the 
information  so  obtained,  or  aj  much  thereof  as  the  President 
may  direct,  shall  be  made  public. 

In  order  to  accomplish  the  purposes  declared  in  the  foregoing 
part  of  this  section,  the  said  commissioner  shall  have  and  exer- 

284 


APPENDIX  E.  285 

cise  the  same  power  and  authority  in  respect  to  corporations, 
joint-stock  companies,  and  combinations  subject  to  the  provisions 
hereof  as  is  conferred  on  the  Interstate  Commerce  Commission 
in  said  "act  to  regulate  commerce"  and  the  amendments  thereto 
in  respect  to  common  carriers,  so  far  as  the  same  may  be  appli- 
cable, including  the  right  to  subpoena  and  compel  the  attendance 
and  testimony  of  witnesses  and  the  production  of  documentary 
evidence  and  to  administer  oaths.  All  the  requirements,  obliga- 
tions, liabilities,  and  immunities  imposed  or  conferred  by  said 
"act  to  regulate  commerce"  and  by  "An  act  in  relation  to  testi- 
mony before  the  Interstate  Commerce  Commission,"  and  so  forth, 
approved  February  eleventh,  eighteen  hundred  and  ninety-three, 
supplemental  to  said  "act  to  regulate  commerce,"  shall  also  apply 
to  a1!  persons  who  may  be  subpoenaed  to  testify  as  witnesses  or 
to  produce  documentary  evidence  in  pursuance  of  the  authority 
conferred  by  this  section. 

It  shall  also  be  the  province  and  duty  of  said  bureau,  under 
the  direction  of  the  Secretary  of  Commerce  and  Labor,  to  gather, 
compile,  publish,  and  supply  useful  information  concerning  cor- 
porations doing  business  within  the  limits  of  the  United  States 
as  shall  engage  in  interstate  commerce  or  in  commerce  between 
the  United  States  and  any  foreign  country,  including  corporations 
engaged  in  insurance,  and  to  attend  to  such  other  duties  as  may 

be  hereafter  provided  by  law. 

*  *  *  $  * 

Approved,  February  14,  1903. 


APPENDIX  F. 

PROVISIONS  OF  FEDERAL  CONSTITUTION  APPLI- 
CABLE TO  ANTI-TRUST  LAWS. 

ARTICLE   I. 

SEC.  8.  The  Congress  shall  have  Power  To  *  *  *  regulate 
Commerce  with  foreign  Nations,  and  among  the  several  States, 
and  with  the  Indian  Tribes. 


ARTICLE  VI. 

*  *  *  This  Constitution,  and  the  Laws  of  the  United  States 
which  shall  be  made  in  Pursuance  thereof ;  and  all  Treaties  made, 
or  which  shall  be  made,  under  the  Authority  of  the  United  States, 
shall  be  the  Supreme  Law  of  the  Land ;  and  the  Judges  in  every 
State  shall  be  bound  thereby,  anything  in  the  Constitution  or 

Laws  of  any  State  to  the  contrary  notwithstanding. 

***** 

AMENDMENTS. 
[ARTICLE  iv.] 

The  right  of  the  people  to  be  secure  in  their  persons,  houses, 
papers,  and  effects,  against  unreasonable  searches  and  s-eizures, 
shall  not  be  violated,  and  no  warrants  shall  issue,  but  upon  prob- 
able cause,  supported  by  oath  or  affirmation,  and  particularly  de- 
scribing the  place  to  be  searched,  and  the  persons  or  things  to  be 
seized. 

[ARTICLE  v.] 

No  person  shall  be  held  to  answer  for  a  capital,  or  otherwise 
infamous  crime,  unless  on  a  presentment  or  indictment  of  a  grand 
jury,  except  in  cases  arising  in  the  land  or  naval  forces,  or  in 
the  militia,  when  in  actual  service  in  time  of  war  or  public  dan- 
ger; nor  shall  any  person  be  subject  for  the  same  offence  to  be 
twice  put  in  jeopardy  of  life  or  limb ;  nor  shall  be  compelled  in 
any  criminal  case  to  be  a  witness  against  himself,  nor  be  deprived 
of  life,  liberty,  or  property,  without  due  process  of  law ;  nor  shall 

286 


APPENDIX  F.  287 

private  property  be  taken  for  public  use,  without  just  compensa- 
tion. 

[ARTICLE  xiv.] 

SEC.  I.  *  *  *  No  State  shall  make  or  enforce  any  law 
which  shall  abridge  the  privileges  or  immunities  of  citizens  of  the 
United  States;  nor  shall  any  State  deprive  any  person  of  life, 
liberty,  or  property,  without  due  process  of  law ;  nor  deny  to  any 
person  within  its  jurisdiction  the  equal  protection  of  the  laws. 


APPENDIX  G. 

PORTION  OF  SUNDRY  CIVIL  ACT,  1914,  APPLICA- 
BLE TO  RESTRICTION  OF  GOVERNMENT  AC- 
TIONS AGAINST  LABOR  AND  AGRICULTURAL 
ORGANIZATIONS. 

AN  ACT  making  appropriations  for  sundry  civil  expenses  of  the  Gov- 
ernment for  the  fiscal  year  ending  June  thirtieth,  nineteen  hundred  and 
fourteen,  and  for  other  purposes. 


Enforcement  of  Anti-trust  laws,  including  not  exceeding  $10,- 
ooo  for  salaries  of  necessary  employees  at  the  seat  of  government, 
$300,000:  Provided,  however,  That  no  part  of  this  money  shall 
be  spent  in  the  prosecution  of  any  organization  or  individual  for 
entering  into  any  combination  or  agreement  having  in  view  the 
increasing  of  wages,  shortening  of  hours,  or  bettering  the  condi- 
tions of  labor,  or  for  any  act  done  in  furtherance  thereof  not  in 
itself  unlawful:  Provided  further,  That  no  part  of  this  appro- 
priation shall  be  expended  for  the  prosecution  of  producers  of 
farm  products  and  associations  of  farmers  who  co-operate  and 
organize  in  an  effort  to  and  for  the  purpose  to  obtain  and  main- 
tain a  fair  and  reasonable  price  for  their  products.  *  *  * 

Approved,  June  23,  1913. 


288 


APPENDIX  H. 
IMMUNITY  PROVISIONS. 

EXTRACT  FROM  APPROPRIATION  ACT  OF  1903. 
[32  Stat,  854,  903.] 

AN  ACT  making  appropriations  for  the  legislative,  executive,  and  judicial 
expenses  of  the  government  for  the  fiscal  year  ending  June  thirtieth, 
nineteen  hundred  and  four,  and  for  other  purposes. 

***** 

That  for  the  enforcement  of  the  provisions  of  the  act  entitled 
"An  act  to  regulate  commerce,"  approved  February  fourth,  eight- 
een hundred  and  eighty-seven,  and  all  acts  amendatory  thereof  or 
supplemental  thereto,  and  of  the  act  entitled  "An  act  to  protect 
trade  and  commerce  against  unlawful  restraints  and  monopolies," 
approved  July  second,  eighteen  hundred  and  ninety,  and  all  acts 
amendatory  thereof  or  supplemental  thereto,  and  Sections 
seventy-three,  seventy-four,  seventy-five,  and  seventy-six  of  the 
act  entitled  "An  act  to  reduce  taxation,  to  provide  revenue  for 
the  government,  and  other  purposes,"  approved  August  twenty- 
seventh,  eighteen  hundred  and  ninety-four,  the  sum  of  five  hun- 
dred thousand  dollars,  to  be  immediately  available,  is  hereby  ap- 
propriated, out  of  any  money  in  the  treasury  not  heretofore  ap- 
propriated, to  be  expended  under  the  direction  of  the  Attorney- 
General  in  the  employment  of  special  counsel  and  agents  of  the 
Department  of  Justice  to  conduct  proceedings,  suits,  and  prose- 
cutions under  said  acts  in  the  courts  of  the  United  States :  Pro- 
vided, That  no  person  shall  be  prosecuted  or  be  subjected  to  any 
penalty  or  forfeiture  for  or  on  account  of  any  transaction,  matter, 
or  thing  concerning  which  he  may  testify  or  produce  evidence, 
documentary  or  otherwise,  in  any  proceeding,  suit,  or  prosecution 
under  said  acts :  Provided  further,  That  no  person  so  testifying 
shall  be  exempt  from  prosecution  or  punishment  for  perjury  com- 
mitted in  so  testifying. 

***** 

Approved,  February  25,  1903. 

289 
19 


290  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

ACT  DEFINING  RIGHT  OF  IMMUNITY. 

[34  Stat.,  798.] 

AN  ACT  defining  the  right  of  immunity  of  witnesses  under  the  act,  enti- 
tled "An  act  in  relation  to  testimony  before  the  Interstate  Commerce 
Commission,"  and  so  forth,  approved  February  eleventh,  eighteen  hun- 
dred and  ninety-three,  and  an  act,  entitled  "An  act  to  establish  the  De- 
partment of  Commerce  and  Labor,"  approved  February  fourteenth,  nine- 
teen hundred  and  three,  and  an  act,  entitled  "An  act  to  further  regulate 
commerce  with  foreign  nations  and  among  the  states,"  approved  Febru- 
ary nineteenth,  nineteen  hundred  and  three,  and  an  act,  entitled  "An  act 
making  appropriations  for  the  legislative,  executive,  and  judicial  ex- 
penses of  the  government  for  the  fiscal  year  ending  June  thirtieth,  nine- 
teen hundred  and  four,  and  for  othr  purposes,"  approved  February 
twenty-fifth,  nineteen  hundred  and  three. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of 
the  United  States  of  America  in  Congress  assembled,  That  under 
the  immunity  provisions  in  the  act  entitled  "An  act  in  relation  to 
testimony  before  the  Interstate  Commerce  Commission,"  and  so 
forth,  approved  February  eleventh,  eighteen  hundred  and  ninety- 
three,  in  Section  six  of  the  act  entitled  "An  act  to  establish  the 
Department  of  Commerce  and  Labor,"  approved  February  four- 
teenth, nin-eteen  hundred  and  three,  and  in  the  act  entitled  "An 
act  to  further  regulate  commerce  with  foreign  nations  and  among 
the  States,"  approved  February  nineteenth,  nineteen  hundred  and 
three,  and  in  the  act  entitled  "An  act  making  appropriations  for 
the  legislative,  executive,  and  judicial  expenses  of  the  govern- 
ment for  the  fiscal  year  ending  June  thirtieth,  nineteen  hundred 
and  four,  and  for  other  purposes,"  approved  February  twenty- 
fifth,  nineteen  hundred  and  three,  immunity  shall  extend  only  to 
a  natural  person  who,  in  obedience  to  a  subpoena,  gives  testimony 
under  oath  or  produces  evidence,  documentary  or  otherwise, 
under  oath. 

Approved,  June  30,  1906. 


APPENDIX  I. 

PROVISIONS  OF  JUDICIAL  CODE  REFERRED  TO  IN 
THE  FEDERAL  TRADE  COMMISSION  ACT,  AND 
CLAYTON  LAW;  ALSO,  PROVISIONS  ABOLISH- 
ING THE  CIRCUIT  COURTS  OF  THE  UNITED 
STATES. 

Section  240,  Containing  Authority  for  Review  by  the  Su- 
preme Court  upon  Certiorari. — 

[Referred  to  in  Section  5  of  the  Federal  Trade  Commission 
Act,  and  in  Section  n  of  the  Clayton  Law.] 

"In  any  case,  civil  or  criminal,  in  which  the  judgment  or  decree 
of  the  Circuit  Court  of  Appeals  is  made  final  by  the  provisions  of 
this  title,  it  shall  be  competent  for  the  Supreme  Court  to  require, 
by  certiorari  or  otherwise,  upon  the  petition  of  any  party  thereto, 
any  such  case  to  be  certified  to  the  Supreme  Court  for  its  review 
and  determination,  with  the  same  power  and  authority  in  the  case 
as  if  it  had  been  carried  by  appeal  or  writ  of  error  to  the  Supreme 
Court." 

Section  263. — 

[Repealed  by  Section  17  of  Clayton  Law.] 

"Whenever  notice  is  given  of  a  motion  for  an  injunction  out  of 

a  district  court,  the  court  or  judge  thereof  may,  if  there  appears 
to  be  danger  of  irreparable  danger  from  delay,  grant  an  order 
restraining  the  act  sought  to  be  enjoined  until  the  decision  of  the 
motion ;  and  such  order  may  be  granted  with  or  without  security, 
in  the  discretion  of  the  court  or  judge." 

Section  266. — 

[Approved,  ratified  and  continued  by  Section  17  of  Clayton 
Law.] 

"No  interlocutory  injunction  suspending  the  enforcement,  op- 
eration, or  execution  of  any  statute  of  a  State  by  restraining  the 
action  of  any  office  of  such  State  in  the  enforcement  or  execution 
of  such  statute,  shall  be  issued  or  granted  by  any  justice  of  the 
Supreme  Court,  or  by  any  district  court  of  the  United  States,  or 
by  any  judge  thereof,  or  by  any  circuit  judge  acting  as  district 
judge,  upon  the  ground  of  the  unconstitutionality  of  such  statute, 
unless  the  application  of  the  same  shall  be  presented  to  a  justice 

291 


292  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

of  the  Supreme  Court  of  the  United  States,  or  to  a  circuit  or  dis- 
trict judge,  and  shall  be  heard  and  determined  by  three  judges,  of 
whom  at  least  one  shall  be  a  justice  of  the  Supreme  Court,  or  a 
circuit  judge,  and  the  other  two  may  be  either  circuit  or  district 
judges,  and  unless  a  majority  of  said  three  judges  shall  concur 
in  granting  such  application. 

Whenever  such  application  as  aforesaid  is  presented  to  a  jus- 
tice of  the  Supreme  Court,  or  to  a  judge,  he  shall  immediately 
call  to  his  assistance  to  hear  and  determine  the  application  two 
other  judges :  Provided,  however,  That  one  of  such  three  judges 
shall  be  a  justice  of  the  Supreme  Court,  or  a  circuit  judge. 

Said  application  shall  not  be  heard  or  determined  before  at 
least  five  days'  notice  of  the  hearing  has  been  given  to  the  Gov- 
ernor and  to  the  Attorney-General  of  the  State,  and  to  such  other 
persons  as  may  be  defendants  in  the  suit :  Provided,  That  if  of 
opinion  that  irreparable  loss  or  damage  would  result  to  the  com- 
plainant unless  a  temporary  restraining  order  is  granted,  any 
justice  of  the  Supreme  Court,  or  any  circuit  or  district  judge, 
may  grant  such  temporary  restraining  order  at  any  time  before 
such  hearing  and  determination  of  the  application  for  an  inter- 
locutory injunction,  but  such  temporary  restraining  order  shall 
remain  in  force  only  until  the  hearing  and  determination  of  the 
application  for  an  interlocutory  injunction  upon  notice  as  afore- 
said. The  hearing  upon  such  application  for  an  interlocutory  in- 
junction shall  be  given  preference  and  shall  be  in  every  way  ex- 
pedited and  be  assigned  for  a  hearing  at  the  earliest  practicable 
day  after  the  expiration  of  the  notice  hereinbefore  provided  for. 
An  appeal  may  be  taken  direct  to  the  Supreme  Court  of  the 
United  States  from  the  order  granting  or  denying,  after  hearing, 
an  interlocutory  injunction  in  such  case." 

Sections  289,  290  and  291,  Abolishing  the  Circuit  Courts  of 
the  United  States,  and  Substituting  the  District  Courts  There- 
for.— 

(Approved  March  3,  1911;  in  effect  January  I,  1912,  36  Stat. 
1087.) 

SEC.  289.  The  circuit  courts  of  the  United  States,  upon  the 
taking  effect  of  this  act,  shall  be  and  hereby  are  abolished.  *  *  * 

SEC.  290.  All  suits  and  proceedings  pending  in  said  circuit 
courts  on  the  date  of  the  taking  effect  of  this  act,  whether  orig- 
inally brought  therein  or  certified  thereto  from  the  district  courts, 


APPENDIX  I.  293 

shall  thereupon  and  thereafter  be  proceeded  with  and  disposed 
of  in  the  same  manner  and  with  the  effect  as  if  originally  begun 
therein.  *  *  * 

SEC.  291.  Wherever,  in  any  law  not  embraced  within  this  act, 
any  reference  is  made  to,  or  any  power  or  duty  is  conferred  or 
imposed  upon,  the  circuit  courts,  such  reference  shall,  upon  the 
taking  effect  of  this  act,  be  deemed  and  held  to  refer  to,  and  to 
confer  such  power  and  impose  such  duty  upon,  the  district  courts. 


APPENDIX  J. 

ANTI-MONOPOLY  PROVISIONS  CONTAINED  IN 
PANAMA  CANAL  ACT. 

[Act  of  March  4,  1913,  (37  Stat.,  560).] 

AN  ACT  to  provide  for  the  opening,  maintenance,  protection  and  opera- 
tion of  the  Panama  Canal,  and  the  sanitation  and  government  of  the 
Canal  Zone. 


SEC.  ii.  That  Section  five  of  the  act  to  regulate  commerce, 
approved  February  fourth,  eighteen  hundred  and  eighty-seven, 
as  heretofore  amended,  is  hereby  amended  by  adding  thereto  a 
new  paragraph  at  the  end  thereof,  as  follows : 

"From  and  after  the  first  day  of  July,  nineteen  hundred  and 
fourteen,  it  shall  be  unlawful  for  any  railroad  company  or  other 
common  carrier  subject  to  the  act  to  regulate  commerce  to  own, 
lease,  operate,  control,  or  have  any  interest  whatsoever  (by  stock 
ownership  or  otherwise,  either  directly,  indirectly,  through  any 
holding  company,  or  by  stockholders  or  directors  in  common,  or 
in  any  other  manner)  in  any  common  carrier  by  water  operated 
through  the  Panama  Canal  or  elsewhere  with  which  said  railroad 
or  other  carrier  aforesaid  does  or  may  compete  for  traffic  or  any 
vessel  carrying  freight  or  passengers  upon  said  water  route  or 
elsewhere  with  which  said  railroad  or  other  carrier  aforesaid  does 
or  may  compete  for  traffic;  and  in  case  of  the  violation  of  this 
provision  each  day  in  which  such  violation  continues  shall  be 
deemed  a  separate  offence." 

Jurisdiction  is  hereby  conferred  on  the  Interstate  Commerce 
Commission  to  determine  questions  of  fact  as  to  the  competition 
or  possibility  of  competition,  after  full  hearing,  on  the  applica- 
tion of  any  railroad  company  or  other  carrier.  Such  application 
may  be  filed  for  the  purpose  of  determining  whether  any  existing 
service  is  in  violation  of  this  section  and  pray  for  an  order  per- 
mitting the  continuance  of  any  vessel  or  vessels  already  in  opera- 
tion, or  for  the  purpose  of  asking  an  order  to  install  new  service 
not  in  conflict  with  the  provisions  of  this  paragraph.  The  Com- 
mission may  on  its  own  motion  or  the  application  of  any  shipper 

294 


APPENDIX  J.  295 

institute  proceedings  to  inquire  into  the  operation  of  any  vessel 
in  use  by  any  railroad  or  other  carrier  which  has  not  applied  to 
the  Commission  and  had  the  question  of  competition  or  the  possi- 
bility of  competition  determined  as  herein  provided.  In  all  such 
cases  the  order  of  said  Commission  shall  be  final. 

If  the  Interstate  Commerce  Commission  shall  be  of  the  opinion 
that  any  such  existing  specified  service  by  water  other  than 
through  the  Panama  Canal  is  being  operated  in  the  interest  of  the 
public  and  is  of  advantage  to  the  convenience  and  commerce  of 
the  people  and  that  such  extension  will  neither  exclude,  prevent, 
nor  reduce  competition  on  the  route  by  water  under  considera- 
tion, the  Interstate  Commerce  Commission  may,  by  order,  extend 
the  time  during  which  such  service  by  water  may  continue  to  be 
operated  beyond  July  first,  nineteen  hundred  and  fourteen.  In 
every  case  of  such  extension  the  rates,  schedules,  and  practices 
of  such  water  carrier  shall  be  filed  with  the  Interstate  Commerce 
Commission  and  shall  be  subject  to  the  act  to  regulate  commerce 
and  all  amendments  thereto  in  the  samfc  manner  and  to  the  same 
extent  as  is  the  railroad  or  other  common  carrier  controlling  such 
water  carrier  or  interested  in  any  manner  in  its  operation :  Pro- 
vided, Any  application  for  extension  under  the  terms  of  this  pro- 
vision filed  with  the  Interstate  Commerce  Commission  prior  to 
July  first,  nineteen  hundred  and  fourteen,  but  for  any  reason  not 
heard  and  disposed  of  before  said  date,  may  be  considered  and 
granted  thereafter. 

No  vessel  permitted  to  engage  in  the  coastwise  or  foreign  trade 
of  the  United  States  shall  be  permitted  to  enter  or  pass  through 
said  canal  if  such  ship  is  owned,  chartered,  operated,  or  controlled 
by  any  person  or  company  which  is  doing  business  in  violation 
of  the  provisions  of  the  act  of  Congress  approved  July  second, 
eighteen  hundred  and  ninety,  entitled  "An  act  to  protect  trade  and 
commerce  against  unlawful  restraints  and  monopolies,"  or  the 
provisions  of  Sections  seventy-three  to  seventy-seven,  both  inclu- 
sive, of  an  act  approved  August  twenty-seventh,  eighteen  hun- 
dred and  ninety-four,  entitled  "An  act  to  reduce  taxation,  to  pro- 
vide revenue  for  the  government,  and  for  other  purposes,"  or  the 
provisions  of  any  other  act  of  Congress  amending  or  supple- 
menting the  said  Act  of  July  second,  eighteen  hundred  and  ninety, 
commonly  known  as  the  Sherman  Anti-trust  Act,  and  amend- 
ments thereto,  or  said  sections  of  the  Act  of  August  twenty- 


296  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

seventh,  eighteen  hundred  and  ninety-four.  The  question  of  fact 
may  be  determined  by  the  judgment  of  any  court  of  the  United 
States  of  competent  jurisdiction  in  any  cause  pending  before  it 
to  which  the  owners  or  operators  of  such  ships  are  parties.  Suit 
may  be  brought  by  any  shipper  or  by  the  Attorney-General  of  the 

United  States. 

***** 


APPENDIX  K. 

TENTATIVE  FORMS  OF  SHERMAN  LAW  SUBMIT- 
TED TO  THE  SENATE  FOR  THE  FIFTY-FIRST 
SESSION  OF  CONGRESS. 

I. 

i.  SHERMAN  ANTI-TRUST  BILL  INTRODUCED  DECEM- 
BER 4,  1889,  DESIGNATED  "SENATE  BILL  NO.  x." 

A  BILL 

[Referred  to  Finance  Committee  of  Senate;  reported  back  by 
Senator  Sherman  with  certain  amendments  January  14,  1890. 
See,  Bills  and  Debates  on  Trusts,  pages  69-71.] 
To  declare  unlawful  trusts  and  combinations  in  restrain  of  trade 
and  Production. 

1  Be  it  enacted  by  the  Senate  and  House  of  Representa- 

2  fives  of  the  United  States  of  America  in  Congress  assembled: 

3  Sec.  i.  That  all  arrangements,  contracts,  agreements,  trusts, 

4  or    combinations    between    persons    or    corporations    made 

5  with  a  view  or  which  tends  to  prevent  full  and  free  com- 

6  petition  in  the  importation,  transportation  or  sale  of  ar- 

7  tides  imported  into  the  United  States,  or  in  the  produc- 

8  tion,  manufacture  or  sale  of  articles  of  domestic  growth 

9  or   production,    or    domestic    raw    material    that   competes 

10  with  any  similar  article  upon  which  a  duty  is  levied  by 

11  the   United    States,   or   which    shall   be   transported    from 

12  one  State  or  Territory  to  another,  and  all  arrangements, 

13  contracts,  agreements,  trusts  or  combinations  between  per- 

14  sons  or  corporations  designed,  or  which  tend,  to  advance 

15  the  cost  to  the  consumer  of  any  such  articles,  are  hereby 

16  declared  to  be  against  public  policy,  unlawful  and  void. 

1  Sec.    2.  That    any    person    or    corporation    injured    or 

2  damnified     by     such     arrangement,     contract,     agreement, 

3  trust  or  combination  may  sue  for  and  recover,  in  any  court 

4  of  the  United  States  of  competent  jurisdiction  of  any  per- 

5  son  or  corporation  a  party  to  a  combination  described  in 

297 


298  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

6  the  first  section  of  this  act,  the  full  consideration  or  sum 

7  paid  by  him  for  any  goods,  wares  and  merchandise  included 

8  in  or  advanced  in  price  by  said  combination. 

1  SEC.  3.  That  all  persons  entering  into  any  such  arrange- 

2  ment,  contract,  agreement,  trust  or  combination  described 

3  in  Section  one  of  this  act,  either  on  his  own  account  or  as 

4  agent  or  attorney  for  another,  or  as  an  officer,  agent  or 

5  stockholder  of  any  corporation,  or  as  a  trustee,  committee, 

6  or  in   any  capacity  whatever,   shall  be   guilty   of   a   high 

7  misdemeanor,  and  on  conviction  thereof  in  any  district  or 

8  circuit  court  of  the  United  States,  shall  be  subject  to  a 

9  fine  of  not  more  than  ten  thousand  dollars  or  to  imprison- 

10  ment  in  the  penitentiary  for  a  term  of  not  more  than  five 

11  years,  or  to  both  such  fine  and  imprisonment  in  the  dis- 

12  cretion  of  the  court.     And  it   shall  be  the   duty  of  the 

13  district  attorney  of  the  United   States   of  the   district   in 

14  which  such  persons  reside  to  institute  the  proper  proceed- 

15  ings  to  enforce  the  provisions  of  this  act. 

II. 

a.  SHERMAN  ANTI-TRUST  SUBSTITUTED  BILL,  RE- 
PORTED BY  SENATOR  SHERMAN  FROM  THE  COMMIT- 
TEE ON  FINANCE,  MARCH  18,  1890. 

[Referred  to  Committee  on  Judiciary,  March  27,  1890;  re- 
drafted by  Senator  Hoar  and  reported  back,  April  23,  1890.  Bills 
and  Debates  on  Trusts,  pages  89,  306,  324,  326.] 

AMENDMENT 

Reported  by  Mr.  Sherman  from  the  Committee  on  Finance,  and 
intended  to  be  proposed  to  the  bill  (S.  i)  to  declare  unlawful 
trusts  and  combinations  in  restraint  of  trade  and  production, 
viz :  Strike  out  all  after  the  enacting  clause  and  insert  the 
following : 

3  That   all    arrangements,    contracts,    agreements,    trusts,   or 

4  combinations  between  two  or  more  citizens  or  corporations, 

5  or  both,  of  different  States,  or  between  two  or  more  citi- 

6  zens  or  corporations,  or  both,  of  the  United   States  and 

7  foreign  States,  or  citizens  or  corporations  thereof,  made 


APPENDIX  K.  299 

8  with  a  view  or  which  tend  to  prevent  full  and  free  com4 

9  petition  in  the  importation,  transportation,  or  sale  of  ar- 

10  tides  imported  into  the  United  States,  or  with  a  view  or 

11  which  tend  to  prevent  full  and  free  competition  in  articles 

12  of  growth,  production,   or  manufacture  of  any   State   or 

13  Territory  of  the  United  States,  with  similar  articles  of  the 

14  growth,  production  or  manufacture  of  any  other  State  or 

15  Territory,  or  in  the  transportation  or  sale  of  like  articles, 

16  the  production  of  any  State  or  Territory  of  the  United 

17  States  into  or  within  any  other  State  or  Territory  of  the 

1 8  United  States;    and  all  arrangements,  trusts  or  combina- 

19  tions  between  such  citizens  or  corporations,  made  with  a 

20  view  or  which  tend  to  advance  the  cost  to  the  consumer 

21  of   any   such  articles,   are  hereby  declared  to  be   against 

22  public  policy,  unlawful  and  void.     And  the  circuit  court 

23  of  the  United  States  shall  have  original  jurisdiction  of  all 

24  suits  of  a  civil  nature  at  common  law  or  in  equity  arising 

25  under  this  section,  and  to  issue  all  remedial  process,  orders, 

26  or  writs  proper  and  necessary  to  enforce  its  provisions. 

27  And  the  Attorney-General  and  the  several  district  attor- 

28  neys  are  hereby  directed,  in  the  name  of  the  United  States, 

29  to  commence  and  prosecute  all  such  cases  to  final  judg- 

30  ment  and  execution. 

1  SEC.    2.  That    any    person    or    corporation    injured    or 

2  damnified  by  such  arrangement,  contract,  agreement,  trust 

3  or  combination  defined  in  the  first  section  of  this  act  may 

4  sue  for  and  recover,  in  any  court  of  the  United  States  of 

5  competent  jurisdiction,  without  respect  to  the  amount  in- 

6  volved,  of  any  person  or  corporation  a  party  to  a  combina- 

7  tion  described  in  the  first  section  of  this  act,  twice  the 

8  amount  of  damages  sustained  and  the  costs  of  the  suit, 

9  together  with  a  reasonable  attorney's  fee. 

III. 

3.  ON  MARCH  21,  1890,  SENATOR  REAGAN,  OF  TEXAS, 
INTRODUCED  THE  FOLLOWING  SUBSTITUTE  BILL: 

[Referred  to  Committee  on  Judiciary,  with  other  proposed 
amendments,  March  27,  1890.  Bills  and  Debates  on  Trusts,  page 
306.] 


3oo  MANUAL  OF  FEDERAL,  TRADE.  COM  MISSION. 

SUBSTITUTE  BILL. 

SEC.  3.  "That  all  persons  engaged  in  the  creation  of  any  trust,  or 
as  owner  or  part  owner,  agent  or  manager  of  any  trust,  employed 
in  any  business  carried  on  with  any  foreign  country,  or  between  the 
States  or  between  any  State  and  the  District  of  Columbia,  or  be- 
tween any  State  and  any  Territory  of  the  United  States,  or  any 
owner  or  part  owner,  agent  or  manager  of  any  corporation  using 
its  powers  for  either  of  the  purposes  specified  in  the  second  sec- 
tion of  this  act,  shall  be  deemed  guilty  of  a  high  misdemeanor, 
and  on  conviction  thereof,  shall  be  fined  in  a  sum  not  exceeding 
$10,000,  or  imprisonment  at  hard  labor  in  the  penitentiary  not 
exceeding  five  years,  or  by  both  of  said  penalties,  in  the  discre- 
tion of  the  court  trying  the  same. 

SEC.  4.  That  a  trust  is  a  combination  of  capital,  skill  or  acts  by 
two  or  more  persons,  firms,  corporations  or  associations  of  per- 
sons, or  of  any  two  or  more  of  them  for  either,  any  or  all  of  the 
following  purposes: 

First.    To  create  or  carry  out  any  restrictions  in  trade. 

Second.  To  limit  or  reduce  the  production  or  to  increase  or 
reduce  the  price  of  merchandise  or  commodities. 

Third.  To  prevent  competition  in  the  manufacture,  making, 
purchase,  sale  or  transportation  of  merchandise,  produce  or  com- 
modities. 

Fourth.  To  fix  a  standard  or  figure  whereby  the  price  to  the 
public  shall  be  in  any  manner  controlled  or  established  of  any 
article,  commodity,  merchandise,  produce  or  commerce  intended 
for  sale,  use  or  consumption. 

Fifth.  To  create  a  monopoly  in  the  making,  manufacture,  pur- 
chase, sale  or  transportation  of  any  merchandise,  article,  produce 
or  commodity. 

Sixth.  To  make  or  enter  into  or  execute  or  carry  out  any 
contract,  obligation  or  agreement  of  any  kind  or  description  by 
which  they  shall  bind  or  shall  have  bound  themselves  not  to  man- 
ufacture, sell,  dispose  of  or  transport  any  article  or  commodity 
or  article  of  trade,  use,  merchandise  or  consumption  below  ci 
common  standard  figure,  or  by  which  they  shall  agree,  in  any 
manner,  to  keep  the  price  of  such  article,  commodity  or  transpor- 
tation at  a  fixed  or  graduated  figure,  or  by  which  they  shall,  in 
any  manner,  establish  or  settle  the  price  of  any  article,  commodity 
or  transportation  between  themselves  and  others  so  as  to  preclude 


APPENDIX  K.  301 

free  and  unrestricted  competition  among  themselves  and  others 
in  the  sale  and  transportation  of  any  such  article  or  commodity, 
or  by  which  they  shall  agree  to  pool,  combine  or  unite  in  any  in- 
terest they  may  have  in  connection  with  the  same  or  transporta- 
tion of  any  such  article  or  commodity  that  its  price  may,  in  any 
manner,  be  so  affected. 

SEC.  5.  That  each  day  any  of  the  persons,  associations  or  cor- 
porations aforesaid  shall  be  engaged  in  violating  the  provisions 
of  this  act  shall  be  held  to  be  a  separate  offence. 


APPENDIX  L. 
EXPEDITING  ACT  OF  1910. 

[36  Stat.,  854-] 

AN  ACT  to  amend  an  act,  entitled  "An  act  to  expedite  the  hearing  and 
determination  of  suits  in  equity  pending  or  hereafter  brought  under  the 
Act  of  July  second,  eighteen  hundred  and  ninety,  entitled  'An  act  to 
protect  trade  and  commerce  against  unlawful  restraints  and  monopolies,' 
'An  act  to  regulate  commerce,'  approved  February  fourth,  eighteen  hun- 
dred and  eighty-seven,  or  any  other  acts  having  a  like  purpose  that  may 
be  hereafter  enacted,"  approved  February  eleventh,  nineteen  hundred 
and  three. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of 
the  United  States  of  America  in  Congress  assembled,  That  Sec-, 
tion  one  of  the  act  entitled  "An  act  to  expedite  the  hearing  and 
determination  of  suits  in  equity  pending  or  hereafter  brought 
under  the  Act  of  July  second,  eighteen  hundred  and  ninety,  en- 
titled 'An  act  to  protect  trade  and  commerce  against  unlawful 
restraints  and  monopolies,*  'An  act  to  regulate  commerce/  ap- 
proved February  fourth,  eighteen  hundred  and  eighty-seven,  or 
any  other  acts  having  a  like  purpose  that  may  be  hereafter  en- 
acted," approved  February  eleventh,  nineteen  hundred  and  three, 
be,  and  the  same  is  hereby  amended  so  as  to  read  as  follows : 

"That  in  any  suit  in  equity  pending  or  hereafter  brought  in 
any  circuit  court  of  the  United  States  under  the  act  entitled  'An 
act  to  protect  trade  and  commerce  against  unlawful  restraints  and 
monopolies,'  approved  July  second,  eighteen  hundred  and  ninety, 
'An  act  to  regulate  commerce,  approved  February  fourth,  eight- 
een hundred  and  eighty-seven,  or  any  other  acts  having  a  like 
purpose  that  hereafter  may  be  enacted,  wherein  the  United 
States  is  complainant,  the  Attorney  General  may  file  with  the 
clerk  of  such  court  a  certificate  that,  in  his  opinion,  the  case  is 
of  general  public  importance,  a  copy  of  which  shall  be  immedi- 
ately furnished  by  such  clerk  to  each  of  the  circuit  judges  of  the 
circuit  in  which  the  case  is  pending.  Thereupon  such  case  shall 
be  given  precedence  over  others  and  in  every  way  expedited,  and 
be  assigned  for  hearing  at  the  earliest  practicable  day,  before 
not  less  than  three  of  the  circuit  judges  of  said  court,  if  there  be 

302 


APPENDIX  L.  303 

three  or  more ;  and  if  there  be  not  more  than  two  circuit  judges, 
then  before  them  and  such  district  judge  as  they  may  select ;  or, 
in  case  the  full  court  shall  not  at  any  time  be  made  up  by  reason 
of  the  necessary  absence  or  disqualification  of  one  or  more  of 
the  said  circuit  judges,  the  justice  of  the  Supreme  Court  assigned 
to  that  circuit  or  the  other  circuit  judge  or  judges  may  designate 
a  district  judge  or  judges  within  the  circuit  who  shall  be  com- 
petent to  sit  in  said  court  at  the  hearing  of  said  suit.  In  the 
event  the  judges  sitting  in  such  case  shall  be  equally  divided  in 
opinion  as  to  the  decision  or  disposition  of  said  cause,  or  in  the 
event  that  a  majority  of  said  judges  shall  be  unable  to  agree 
upon  the  judgment,  order,  or  decree  finally  disposing  of  said  case 
in  said  court  which  should  be  entered  in  said  cause,  then  they 
shall  immediately  certify  that  fact  to  the  Chief  Justice  of  the 
United  States,  who  shall  at  once  designate  and  appoint  some  cir- 
cuit judge  to  sit  with  said  judges  and  to  assist  in  determining  said 
cause.  Such  order  of  the  chief  justice  shall  be  immediately 
transmitted  to  the  clerk  of  the  circuit  court  in  which  said  cause  is 
pending,  and  shall  be  entered  upon  the  minutes  of  said  court. 
Thereupon  said  cause  shall  at  once  be  set  down  for  reargument 
and  the  parties  thereto  notified  in  writing  by  the  clerk  of  said 
court  of  the  action  of  the  court  and  the  date  fixed  for  the  ne- 
argument  thereof.  The  provisions  of  this  section  shall  apply  to 
all  causes  and  proceedings  in  all  courts  now  pending,  or  which 
may  hereafter  be  brought. 
Approved,  June  25,  1910. 


APPENDIX  M. 

CONTROL     OF     CORPORATIONS,     PERSONS,     AND 
FIRMS  ENGAGED  IN  INTERSTATE  COMMERCE. 

[Senate  Report  No.  1326,  Sixty-second  Congress,  third  session;  ordered 
to  be  printed,  February  26,  1913.] 

Mr.  Cummins,  from  the  Committee  on  Interstate  Commerce, 
submitted  the  following  report  of  the  committee : 

The  Committee  on  Interstate  Commerce,  to  which  was  referred 
the  following  resolution : 

Resolved,  That  the  Committee  on  Interstate  Commerce  is  hereby  au- 
thorized and  directed,  by  subcommittee  or  otherwise,  to  inquire  into  and 
report  to  the  Senate  at  the  earliest  date  practicable  what  changes  are 
necessary  or  desirable  in  the  laws  of  the  United  States  relating  to  the  cre- 
ation and  control  of  corporations  engaged  in  interstate  commerce,  and 
what  changes  are  necessary  or  desirable  in  the  laws  of  the  United  States 
relating  to  persons  or  firms  engaged  in  interstate  commerce,  and  for  this 
purpose  they  are  authorized  to  sit  during  the  sessions  or  recesses  of  Con- 
gress, at  such  times  and  places  as  they  may  deem  desirable  or  practicable ; 
to  send  for  persons  and  papers,  to  administer  oaths,  to  summon  and  com- 
pel the  attendance  of  witnesses,  to  conduct  hearings  and  have  reports  of 
same  printed  for  use,  and  to  employ  such  clerks,  stenographers,  and  other 
assistants  as  shall  be  necessary,  and  any  expense  in  connection  with  such 
inquiry  shall  be  paid  out  of  the  contingent  fund  of  the  Senate  upon 
vouchers  to  be  approved  by  the  chairman  of  the  committee. 

begs  leave  to  make  the  following  report : 

On  the  26th  day  of  July,  1911,  the  Senate  adopted  the  fore- 
going resolution,  and  acting  under  the  authority  and  in  pursuance 
thereof  the  Committee  on  Interstate  Commerce  provided  for  open 
hearings  upon  the  subject  matter  of  the  resolution.  The  hearings 
began  on  the  I5th  day  of  November,  1911,  and  were  continued 
from  day  to  day  for  more  than  three  months,  during  which  time 
103  men  appeared  before  the  committee,  and  their  statements,  to- 
gether with  the  exhibits  and  documents  submitted  by  them,  fill 
2,799  printed  pages.  A  printed  copy  of  these  statements,  exhibits, 
and  documents,  including  an  index,  laws  and  reference  concern- 
ing industrial  combinations  in  foreign  countries  and  a  collection 
of  judicial  decisions  touching  the  power  of  Congress  in  the  regu- 

304 


APPENDIX  M.  305 

lation  of  commerce  among  the  States,  in  all,  five  volumes,  is  here- 
with presented  to  the  Senate. 

While  the  committee  is  conscious  that  some  of  the  matter  ad- 
duced at  the  hearings  and  submitted  as  a  part  of  this  report  is 
not  relevant  to  the  questions  under  consideration  and  of  little 
worth,  it  believes  that,  upon  the  whole,  the  hearings  have  fur- 
nished one  of  the  most  valuable  contributions  that  can  be  found 
in  the  literature  of  the  subject.  It  is  not  yet  ready  to  report  any 
of  the  bills  which  are  now  before  it,  and  which  propose  specific 
modifications  of  or  additions  to  the  existing  statute;  nor  is  it 
prepared  at  this  time  to  report  a  substitute  for  them.  It  hopes 
that  it  may  be  able  before  the  close  of  the  present  session  to  act 
finally  upon  these  bills  and  recommend  in  definite  form  the  leg- 
islation which  it  may  think  necessary  or  wise  to  meet  modern 
business  conditions.  It  is,  however,  prepared  to  answer  the  gen- 
eral inquiries  propounded  in  the  resolution,  and  in  view  of  the 
overwhelming  importance  of  the  subject  it  ventures  to  add  to  the 
direct  response  some  observations  upon  the  origin,  purpose,  and 
effect  of  the  enactment  commonly  known  as  the  Anti-trust  law,  to 
indicate  wherein  it  is  inadequate,  and  to  suggest  the  general  scope 
of  further  regulation. 

The  committee  is  of  the  opinion : 

First.  That  the  statute  should  stand  as  the  fundamental  law 
upon  the  subject,  and  that  any  supplemental  legislation  for  more 
effectual  control  and  regulation  of  interstate  and  foreign  com- 
merce should  be  in  harmony  with  the  purpose  of  the  existing 
statute. 

Second.  That  whatever  may  be  our  views  respecting  the  power 
of  Congress  to  enact  a  general  Federal  incorporation  law,  it  is 
neither  necessary  nor  desirable  at  this  time  to  provide  for  the 
organization  under  act  of  Congress  of  industrial  corporations 
which  propose  to  engage  in  commerce  among  the  States  and  with 
foreign  nations. 

Third.  That  it  is  desirable  to  impose  upon  corporations  now 
or  hereafter  organized  under  State  law,  and  engaged  or  propos- 
ing to  engage  in  such  commerce,  further  conditions  or  regulations 
affecting  both  their  organization  and  the  conduct  of  their  busi- 
ness, and  also  to  impose  further  conditions  or  regulations  upon 
persons,  copartnerships,  and  other  associations  now  engaged,  or 
hereafter  engaging,  in  such  commerce,  the  general  character  of 
20 


306  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

such  regulation  to  be  the  same  as  those  laid  upon  corporations, 
except  such  conditions  or  regulations  as  are  in  their  very  nature 
peculiar  to  the  corporate  form  of  commercial  activity. 

It  is  plain  that  the  first  question  to  be  answered  in  considering 
what  additional  legislation  upon  the  subject  is  necessary  or  desir- 
able is  a  vital  one,  it  is  this :  Should  Congress  attempt  to  main- 
tain competitive  conditions  in  the  general  interstate  commerce  of 
the  country,  where  they  still  exist,  and  to  restore  such  conditions 
where  they  have  been  destroyed,  or  should  it  accept  the  complete 
or  partial  overthrow  of  competition  and  resort  to  some  other 
method  of  protecting  the  people  against  the  power  of  combina- 
tion and  monopoly? 

Without  doubt  the  chief  if  not  the  only  object  in  mind,  when 
the  Anti-trust  law  was  passed,  was  to  maintain  competition  as  an 
effective  regulating  force  in  business  by  making  it  unlawful  to 
enter  into  any  contract  or  combination  in  restraint  of  trade  or 
commerce  among  the  States  or  with  foreign  nations,  or  to  monop- 
olize, or  attempt  to  monopolize,  such  trade  or  commerce.  The 
bill  introduced  by  Senator  Sherman,  out  of  which  the  present 
statute  grew,  was  in  terms  directed  against  the  suppression  of' 
competition.  After  a  long  debate  and  much  reflection  the  Judi- 
ciary Committee  of  the  Senate  reported  a  substitute  in  which  "re- 
straint of  trade"  was  the  thing  forbidden  instead  of  interference 
with  competition.  This  was  accepted  not  because  there  was  any 
abandonment  of  the  desire  to  preserve  competition,  but  because 
there  was  a  common  law  on  the  subject  well  established  and 
carefully  elucidated  in  the  English  decisions.  The  common  law 
was  that  both  contracts  and  acts  in  restraint  of  trade  were  in- 
jurious to  the  public  welfare  and  therefore  opposed  to  public  pol- 
icy. The  Congress  of  1890  very  wisely  borrowed  the  language 
of  the  common  law  and  with  it  came  the  learning  of  the  judges, 
who  had  from  time  to  time  declared  and  expounded  it.  It  is  not 
the  purpose  of  the  committee  to  recite  the  development  of  the 
English  doctrine.  It  was  not  always  stated  with  exact  accuracy 
and  there  is  some  inharmony  of  expression,  but  it  may  be  said 
with  confidence  that  a  restraint  of  trade  consisted  of  such  un- 
reasonable restriction  of  competition  as  impaired  substantially, 
and  to  the  public  injury,  the  freedom  of  trade  or  the  freedom  to 
trade.  Interference  with  free  competition  was  generally  but  not 
necessarily  a  restraint  of  trade,  for  there  were  some  restrictions 


APPENDIX  M.  307 

that  could  be  put  upon  competition  and  upon  competitors  that  left 
the  competitive  force  as  an  adequate  protection  to  the  people. 
Hence  the  common  law  was  that  unreasonable,  unfair,  undue  re- 
straint upon  or  interference  with  competition  or  competitive  con- 
ditions constituted  a  restraint  of  trade. 

The  committee  has  made  this  comment  upon  the  common  law, 
and  pointed  out  the  distinction  between  "restraint  of  competi- 
tion" and  "restraint  of  trade"  in  order  that  it  may  be  fully  under- 
stood in  its  analysis  of  the  conflict  between  the  earlier  and  later 
opinions  of  the  Supreme  Court  of  the  United  States  relating  to 
the  construction  and  application  of  the  Anti-trust  statute. 

The  committee  will  not  at  this  time  enter  upon  an  extended 
argument  respecting  the  policy  of  maintaining  competition  or 
competitive  conditions  in  the  business  of  the  country.  It  is  well 
understood  that  there  are  many  distinguished  students  and  highly 
trained  thinkers  who  believe  that  the  age  of  competition  is  past, 
and  that  for  the  struggle  which  competition  involves  there  should 
be  substituted  combination  and  co-operation,  under  such  regula- 
tion and  supervision  as  will  protect  the  people  from  the  oppres- 
sion of  monopolistic  power,  and  added  to  the  students  and  think- 
ers who  have  reached  this  conclusion  through  mere  observation 
and  investigation  there  are  many  men  engaged  in  commerce,  and 
who  therefore  speak  from  a  practical  standpoint,  who  have  also 
concluded  that  some  form  of  regulated  monopoly  or  concentra- 
tion should  be  adopted.  All  these  men,  whether  theorists  or 
otherwise,  admit  that  if  we  abandon  the  effort  to  maintain  com- 
petition the  government  must  undertake,  directly  or  indirectly,  to 
fix  prices  for  the  combinations  or  monopolies.  The  committee 
feels  that  the  time  has  not  yet  come  for  so  radical  a  departure 
from  the  long-established  policy  of  the  country,  and  it  hopes 
that  the  time  may  never  come  when  it  will  be  necessary  for  the 
government  to  assume  the  task  of  establishing  prices  for  general 
commodities.  It  believes  that  the  progress  of  the  world  depends 
in  a  large  measure  upon  that  fair,  reasonable  rivalry  among  men 
which  has  hitherto  characterized  the  advances  of  civilization. 

It  is  frequently  declared  that  the  law  can  not  compel  men  em- 
ployed in  like  business  to  compete  with  each  other.  There  is  a 
sense  in  which  this  is  true,  but  it  is  only  technically  true.  What 
is  meant  when  we  use  the  phrase  "maintaining  competition"  is 
maintaining  competitive  conditions.  We  can  both  create  and 


308  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

maintain  competitive  conditions,  and,  until  human  nature  is  rev- 
olutionized, when  competitive  conditions  exist  there  will  be  actual 
competition;  but  if  for  some  extraordinary  reason  that  should 
fail  there  will  be,  at  least,  a  potential  competition  tending  to  pre- 
vent undue  prices  and  unfair  practices.  Without  going  further 
into  the  issue  between  regulated  competition  and  regulated  mo- 
nopoly, the  committee  reiterates  its  finding  that  the  Anti-trust 
statute  should  stand  and  that  every  possible  effort  to  create  and 
preserve  competitive  conditions  should  be  made. 

Assuming,  therefore,  that  Congress  should  maintain  the  policy 
established  by  the  Anti-trust  law  and  should  make  it  more  ef- 
fective by  additional  legislation,  if  it  be  within  our  power  to  do 
so,  the  committee  calls  attention  to  the  interpretation  which  the 
Supreme  Court  has  given  to  the  statute  and  to  the  application  of 
its  provisions  which  that  tribunal  has  made  in  cases  which  have 
come  before  it  for  decision.  It  is  not  the  intent  of  the  committee, 
in  this  report,  to  review  the  opinions  of  the  Supreme  Court  one 
by  one,  but  rather  to  select  certain  types  which  will  either  demon- 
strate the  wisdom  of  additional  legislation  or  show  that  the  law 
is  adequate  as  it  is. 

The  committee  selects  for  the  purpose  indicated  the  following 
cases,  all  of  which  arose  under  the  statute  now  being  considered : 

United  States  v.  E.  C.  Knight  Co.  (156  U.  S.  i). 
United  States  v.  Trans-Missouri  Freight  Association  (166  U.  S.  290). 
United  States  v.  Joint  Traffic  Association  (171  U.  S.  505). 
Hopkins  v.  United  States  (171  U.  S.  578). 
Northern  Securities  Company  v.  United  States  (193  U.  S.  197). 
Standard  Oil  Co.  v.  United  States  (221  U.  S.  i). 
United  States  v.  American  Tobacco  Company,  (221  U.  S.  106). 
United  States  v.  Union  Pacific  Railroad  Co.  (not  yet  reported,  opinion 
delivered  Dec.  2,  1912). 

The  committee  does  not  give  a  statement  of  the  facts  in  each 
of  these  cases,  for  to  do  so  would  greatly  prolong  the  report,  and 
it  will  be  taken  for  granted  that  those  who  are  interested  in  the 
subject  are  already  familiar  with  the  facts  as  they  appear  in  the 
Supreme  Court  reports. 

The  rule  of  law  announced  in  United  States  v.  Knight  Co.  and 
in  Hopkins  v.  United  States  is  that  a  restraint  of  trade  however 
unreasonable  is  not  prohibited  by  the  Anti-trust  statute,  no  matter 
how  general  or  disastrous  the  interference  or  restraint  may  be 
upon  commerce  among  the  States  unless  it  directly  affects  such 


APPENDIX  M.  309 

commerce.  There  is  a  general  understanding  among  the  judges 
and  lawyers  of  the  country  that  the  Knight  case  has  been  over- 
ruled or  modified  in  subsequent  decisions.  Undoubtedly  it  can  be 
fairly  inferred  from  the  recent  opinions  of  the  court  in  like  cases 
that,  if  the  facts  of  the  case  were  now  presented,  it  would  be  held 
that  the  restraint  was  direct ;  but  the  rule  of  law  established  has 
never  been  questioned  by  the  court  and  has  been  emphatically  re- 
asserted in  every  prominent  opinion  hitherto  rendered.  The  com- 
mittee does  not  bring  these  cases  forward  for  the  purpose  of  dis- 
puting the  soundness  of  the  rule  under  existing  legislation.  Its 
object  is  to  disclose,  as  clearly  as  possible,  the  scope  of  judicial 
discretion,  and  therefore  of  business  uncertainty  which  it  creates. 
In  every  prosecution  under  the  act  wherein  there  is  proven  or  ad- 
mitted a  contract  or  combination  which  restrains  trade  among  the 
States,  the  first  thing  that  the  court  must  ascertain  and  declare  is 
whether  the  restraint  is  direct  or  indirect.  In  the  Knight  and  Hop- 
kins cases,  and  others  of  that  type,  it  was  held  to  be  indirect.  In 
the  Northern  Securities  Co.,  Standard  Oil  Co.,  and  American  To- 
bacco Co.  cases  it  was  held  to  be  direct.  It  is  obvious  that  the 
opinion  of  any  given  man  in  any  given  case  upon  this  question, 
whether  he  be  judge  or  not,  must  depend  largely,  not  upon  his 
learning  in  the  law  but  upon  his  training  and  bent  in  the  economy 
of  commerce.  The  result  has  been,  and  necessarily  will  be,  that 
the  law  officer  of  the  government  before  he  institutes  a  prosecu- 
tion must  determine  whether  the  restraint  is  direct  and  immediate, 
and  the  court  in  order  to  decide  the  issue  must  employ  the  func- 
tions of  the  legislator  rather  than  the  lawyer. 

The  consequence  is  twofold :  First,  the  Department  of  Justice 
will  ignore  a  great  many  unlawful  transactions  because  there  will 
be  doubt  as  to  whether  the  interference  with  interstate  or  inter- 
national trade  is  direct  or  indirect;  second,  the  business  com- 
munity has  found  itself,  and  will  find  itself  in  a  state  of  uncer- 
tainty as  to  whether  a  particular  transaction  is  to  be  judged  by 
the  law  of  the  State  or  the  law  of  the  Nation.  It  is  not  claimed 
that  this  undefined  and  undefinable  field  of  judicial  discretion  can 
be  wholly  occupied  by  legislation,  but  it  is  manifest  that  it  is  the 
duty  of  the  legislative  branch  of  the  government  to  circumscribe 
it  within  the  closest  practicable  bounds.  The  committee  will 
recur  to  this  subject  in  connection  with  another  aspect  of  the 
judicial  power,  and  contents  itself  now  with  a  statement  of  its 


310  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

conclusion  that  there  should  be  further  legislation  specifically 
prohibiting  certain  forms  of  association,  combination,  or  monop- 
oly which  admittedly  restrain  trade  and  commerce  among  the 
States  and  with  foreign  nations,  but  which  may  be  held  by  the 
courts  to  be  indirect  or  remote  interferences. 

The  committee  has  first  referred  to  the  point  just  mentioned, 
not  because  it  is  first  in  importance,  but  because  it  first  arose. 
It  now  passes  to  another  and  more  serious  weakness  in  the  law 
as  now  interpreted. 

In  the  Trans-Missouri  Freight  Association  case  there  devel- 
oped a  controversy  among  the  members  of  the  Supreme  Court 
that  was  carried  on  with  unabated  vigor  through  the  15  years 
intervening  between  the  opinion  in  the  Freight  Association  case 
and  the  opinion  in  the  Standard  Oil  Co.  case.  In  this  period  the 
vicissitudes  of  life  and  the  changes  upon  the  bench  which  neces- 
sarily ensued  converted  the  opinion  of  the  court  in  the  Freight 
Association  case  into  a  single  dissenting  opinion  in  the  Standard 
Oil  Co.  case,  and  the  dissenting  opinion  in  the  former  case  into  the 
opinion  of  the  court  in  the  latter  case.  In  the  Freight  Associa- 
tion case  Mr.  Justice  Peckham,  in  delivering  the  opinion  of  the 
court,  said : 

Second.  The  next  question  to  be  discussed  is  as  to  what  is  the  true  con- 
struction of  the  statute,  assuming  that  it  applies  to  common  carriers  by 
railroad.  What  is  the  meaning  of  the  language  as  used  in  the  statute  that 
"every  contract,  combination  in  the  form  of  trust  or  otherwise,  or  con- 
spiracy in  restraint  of  trade  or  commerce  among  the  several  States  or 
with  foreign  nations,  is  hereby  declared  to  be  illegal"?  Is  it  confined  to 
a  contract  or  combination  which  is  only  in  unreasonable  restraint  of  trade 
or  commerce,  or  does  it  include  what  the  language  of  the  act  plainly  and 
in  terms  covers,  all  contracts  of  that  nature  (p.  327)  ? 

The  learned  justice  answered  the  question  thus  propounded 
many  times  and  in  great  variety  of  phrase  in  the  course  of  the 
opinion,  and  the  committee  quotes  some  of  these  answers. 

When,  therefore,  the  body  of  an  act  pronounces  as  illegal  every  con- 
tract or  combination  in  restraint  of  trade  or  commerce  among  the  several 
States,  etc.,  the  plain  and  ordinary  meaning  of  such  language  is  not  lim- 
ited to  that  kind  of  contract  alone  which  is  in  unreasonable  restraint  of 
trade,  but  all  contracts  are  included  in  such  language,  and  no  exception  or 
limitation  can  be  added  without  placing  in  the  act  that  which  has  been 
omitted  by  Congress  (p.  328). 

But  we  can  not  see  how  the  statute  can  be  limited,  as  it  has  been  by  the 
courts  below,  without  reading  into  its  text  an  exception  which  alters  the 


APPENDIX  M.  311 

natural  meaning  of  the  language  used,  and  that,  too,  upon  a  most  material 
point,  and  where  no  sufficient  reason  is  shown  for  believing  that  such  alter- 
ation would  make  the  statute  more  in  accord  with  the  intent  of  the  law- 
making  body  that  enacted  it  (p.  329). 

"The  arguments  which  have  been  addressed  to  us  against  the  inclusion 
of  all  contracts  in  restraint  of  trade,  as  provided  for  by  the  language  of 
the  act,  have  been  based  upon  the  alleged  presumption  that  Congress,  not- 
withstanding the  language  of  the  act,  could  not  have  intended  to  embrace 
all  contracts,  but  only  such  contracts  as  were  in  unreasonable  restraint  of 
trade.  Under  these  circumstances  we  are,  therefore,  asked  to  hold  that 
the  act  of  Congress  excepts  contracts  which  are  not  in  unreasonable  re- 
straint of  trade,  and  which  only  keep  rates  up  to  a  reasonable  price,  not- 
withstanding the  language  of  the  act  makes  no  such  exception.  In  other 
words,  we  are  asked  to  read  into  the  act  by  way  of  judicial  legislation  an 
exception  that  is  not  placed  there  by  the  law-making  branch  of  the  govern- 
ment, and  this  is  to  be  done  upon  the  theory  that  the  impolicy  of  such  leg- 
islation is  so  clear  that  it  can  not  be  supposed  that  Congress  intended  the 
natural  import  of  the  language  used.  This  we  can  not  and  ought  not  to 
do  (p.  340). 

"The  conclusion  which  we  have  drawn  from  the  examination  above 
made  into  the  question  before  us  is  that  the  Anti-trust  act  applies  to  rail- 
roads, and  that  it  renders  illegal  all  agreements  which  are  in  restraint  of 
trade  or  commerce  as  we  have  above  defined  that  expression,  and  the 
question  then  arises  whether  the  agreement  before  us  is  of  that  nature" 
(P.  340. 

The  issue  was  clearly  joined  by  Mr.  Justice  White  (now  Chief 
Justice),  who  in  his  dissenting  opinion,  in  which  Justices  Field, 
Gray,  and  Shiras  concurred,  thus  stated  the  question: 

"To  state  the  proposition  in  the  form  in  which  it  was  earnestly  pressed 
in  the  argument  at  bar,  it  is  as  follows :  Congress  has  said  every  contract 
in  restraint  of  trade  is  illegal.  When  the  law  says  every,  there  is  no  power 
in  the  courts,  if  they  correctly  interpret  and  apply  the  statute,  to  substitute 
the  word  'some'  for  the  word  'every.'  If  Congress  had  meant  to  forbid 
only  restraints  of  trade  which  were  unreasonable  it  would  have  said  so; 
instead  of  doing  this  it  has  said  'every,'  and  this  word  of  universality  em- 
braces both  contracts  which  are  reasonable  and  unreasonable"  (p.  345)- 

The  distinguished  justice  begins  his  answer  to  the  proposition 
just  quoted  as  follows : 

I  commence,  then,  with  these  two  conceded  propositions,  one  of  law 
and  the  other  of  fact,  first  that  only  such  contracts  as  unreasonably  re- 
strain trade  are  violative  of  the  general  law,  and,  second,  that  the  par- 
ticular contract  here  under  consideration  is  reasonable,  and  therefore  not 
unlawful  if  the  general  principles  of  law  are  to  be  applied  to  it  (p.  344)- 


312  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

Again : 

Its  title  is  "An  act  to  protect  trade  and  commerce  against  unlawful  re- 
straints and  monopolies."  The  word  "unlawful"  clearly  distinguishes  be- 
tween contracts  in  restraint  of  trade  which  are  lawful  and  those  which 
are  not.  In  other  words,  between  those  which  are  unreasonably  in  re- 
straint of  trade,  and  consequently  invalid,  and  those  which  are  reasonable 
and  hence  lawful  (p.  352). 

Again : 

If  these  obvious  rules  of  interpretation  be  applied,  it  seems  to  me  they 
render  it  impossible  to  construe  the  words  "every  restraint  of  trade"  used 
in  the  act  in  any  other  sense  than  as  excluding  reasonable  contracts,  as 
the  fact  that  such  contracts  were  not  considered  to  be  within  the  rule  of 
contracts  in  restraint  of  trade  was  thoroughly  established  both  in  England 
and  in  this  country  at  the  time  the  act  was  adopted  (p.  354). 

Again : 

Indeed,  it  seems  to  me  there  can  be  no  doubt  that  reasonable  contracts 
can  not  be  embraced  within  the  provisions  of  the  statute  if  it  be  inter- 
preted by  the  light  of  the  supreme  command  that  the  intention  of  the  law 
must  be  carried  out,  and  it  must  be  so  construed  as  to  afford  the  remedy 
and  frustrate  the  wrong  contemplated  by  its  enactment  (p.  355). 

It  will  be  noted  that  but  once  in  the  dissenting  opinions  is  the 
word  "unreasonable"  used  to  qualify  the  phrase  "in  restraint  of 
trade."  It  is  generally  employed  to  qualify  the  word  "contract." 
There  is  some  difference  between  saying  that  there  may  be  a  rea- 
sonable interference  with  competition  or  freedom  in  trade  or 
freedom  to  trade  which  did  not,  at  the  common  law,  constitute  a 
restraint  of  trade,  and  saying  that  there  can  be,  under  our  statute, 
a  reasonable  restraint  of  trade.  But  this  was  only  the  beginning. 

Two  years  later  the  suit  of  the  United  States  v.  Joint  Traffic 
Association  came  on  for  decision.  Again  Mr.  Justice  Peckham 
delivered  the  opinion  of  the  court,  and  upon  the  point  we  are  con- 
sidering there  seems  to  have  been  no  change  in  the  attitude  of  the 
members  of  the  court  toward  it.  It  is  instructive  to  observe,  how- 
ever, that  in  referring  to  Hopkins  v.  The  United  States,  in  which 
the  opinion  was  handed  down  at  the  same  term,  the  learned  jus- 
tice said : 

In  Hopkins  v.  The  United  States,  decided  at  this  term,  post  578,  we  say 
that  the  statute  applies  only  to  those  contracts  whose  direct  and  immediate 
effect  is  a  restraint  upon  interstate  commerce  *  *  *  the  effect  upon 
interstate  commerce  must  not  be  indirect  or  incidental  only  (p.  568). 


APPENDIX  M.  313 

Five  years  thereafter  the  well-known  Northern  Securities  case 
was  decided,  and  the  struggle  was  renewed  with  intense  earnest- 
ness. Mr.  Justice  Harlan  rendered  the  opinion  of  the  court,  and 
this  is  the  way  he  stated  the  question : 

Is  the  act  to  be  construed  as  forbidding  every  combination  or  conspiracy 
in  restraint  of  trade  or  commerce  among  the  States  or  with  foreign  na- 
tions? Or  does  it  embrace  only  such  restraints  as  are  unreasonable  in 
their  nature?  Is  the  motive  with  which  a  forbidden  combination  or  con- 
spiracy is  formed  at  all  material  when  it  appears  that  the  necessary  ten- 
dency of  that  particular  combination  or  conspiracy  in  question  is  to  re- 
strict or  suppress  free  competition  between  competing  railroads  engaged 
in  commerce  among  the  States?  Does  the  act  of  Congress  prescribe,  as 
a  rule  for  interstate  or  international  commerce,  that  the  operation  of  the 
natural  laws  of  competition  between  those  engaged  in  such  commerce  shall 
not  be  restricted  or  interfered  with  by  any  contract,  combination,  or  con- 
spiracy (p.  328) ? 

In  answering  the  question  he  probably  goes  a  little  further  than 
Justice  Peckham.  He  states  as  the  conclusion  to  be  drawn  from 
former  opinions  of  the  courts : 

That  the  act  is  not  limited  to  restraints  of  interstate  and  international 
trade  or  commerce  that  are  unreasonable  in  their  nature,  but  embraces 
all  direct  restraints  imposed  by  any  combination,  conspiracy,  or  monopoly 
upon  such  trade  or  commerce;  *  *  *  .  That  every  combination  or 
conspiracy  which  would  extinguish  competition  between  otherwise  com- 
peting railroads  engaged  in  interstate  trade  or  commerce,  and  which 
would  in  that  way  restrain  such  trade  or  commerce,  is  made  illegal  by  the 
act;  *  *  *  .  That  to  vitiate  the  combination,  such  as  the  act  of  Con- 
gress condemns,  it  need  not  be  shown  that  the  combination  in  fact  results 
or  will  result  in  a  total  suppression  of  trade  or  in  a  complete  monopoly, 
but  it  is  only  essential  to  show  that  by  its  necessary  operation  it  tends  to 
restrain  interstate  or  international  trade  or  commerce  or  tends  to  create 
a  monopoly  in  such  trade  or  commerce  and  to  deprive  the  public  of  the 
advantages  that  flow  from  free  competition  (p.  331). 

Whether  the  free  operation  of  the  normal  laws  of  competition  is  a 
wise  and  wholesome  rule  for  trade  and  commerce  is  an  economic  question 
which  this  court  need  not  consider  or  determine.  Undoubtedly  there  are 
those  who  think  that  the  general  business  interest  and  prosperity  of  the 
country  will  be  best  promoted  if  the  rule  of  competition  is  not  applied. 
But  there  are  others  who  believe  that  such  a  rule  is  more  necessary  in 
these  days  of  enormous  wealth  than  it  ever  was  in  any  former  period  of 
our  history.  Be  all  this  as  it  may,  Congress  has  in  effect  recognized  the 
rule  of  free  competition  by  declaring  illegal  every  combination  or  con- 
spiracy in  restraint  of  interstate  and  international  commerce  (p.  337). 

Mr.  Justice  Brewer  was  with  the  majority  of  the  court  in  the 
Trans-Missouri  Association  case,  and  he  concurred  in  the  de- 


314  MANUAL  OP  FEDERAL  TRADE  COMMISSION. 

cision  in  the  Northern  Securities  Co.  case ;  but  upon  the  question 
we  are  discussing  he  rejected  the  reasoning  of  Justice  Harlan  and 
adopted  the  views  expressed  by  Justice  White  in  the  former  case. 
He  said : 

Instead  of  holding  that  the  Anti-trust  act  includes  all  contracts,  rea- 
sonable or  unreasonable,  in  restraint  of  interstate  trade,  the  ruling  should 
have  been  that  the  contracts  there  presented  were  unreasonable  restraints 
of  interstate  trade,  and  as  such  within  the  scope  of  the  act.  That  act,  as 
it  appears  from  its  title,  was  leveled  at  only  "unlawful  restraints  and  mo- 
nopolies." Congress  did  not  intend  to  reach  and  destroy  those  minor 
contracts  in  partial  restraint  of  trade  which  the  long  course  of  decision  at 
common  law  had  affirmed  were  reasonable  and  ought  to  be  upheld.  The 
purpose  rather  was  to  place  a  statutory  prohibition  with  prescribed  pen- 
alties and  remedies  upon  those  contracts  which  were  in  direct  restraint  of 
trade,  unreasonable,  and  against  public  policy.  Whenever  a  departure 
from  common-law  rules  and  definitions  is  claimed,  the  purpose  to  make 
the  departure  should  be  clearly  shown.  Such  a  purpose  does  not  appear 
and  such  a  departure  was  not  intended  (p.  361). 

The  Chief  Justice  and  Justices  White,  Peckham,  and  Holmes 
dissented.  Justice  White,  while  discussing  many  phases  of  the 
relation  between  the  general  and  the  State  governments,  finally 
rested  his  opinion  upon  the  Knight  case,  holding  that  there  was 
no  direct  restraint  of  interstate  commerce.  Justice  Holmes, 
while  concurring  with  Justice  White,  took  occasion  to  say,  in  sub- 
stance, that  the  method  adopted  by  the  defendants  for  the  sup- 
pression of  competition  did  not  constitute  a  restraint  of  trade  in 
the  sense  of  the  Anti-trust  law. 

With  the  Northern  Securities  case  there  terminated  one  dis- 
tinct, striking  period  in  the  interpretation  and  application  of  the 
Anti-trust  statute.  It  is  needless  to  inquire  at  length  whether  or 
not  the  views  of  the  court,  as  expressed  in  the  opinions  of  Jus- 
tices Peckham  and  Harlan,  were  in  exact  harmony  with  the  com- 
mon law  as  to  the  meaning  or  definition  of  the  phrase  "restraint 
of  trade."  Even  if  these  learned  judges  were  not  quite  success- 
ful in  distinguishing  the  difference,  at  the  common  law,  between 
a  restraint  of  competition  and  a  restraint  of  trade,  it  still  remains 
true  that  for  more  than  13  years  repeated  decisions  of  the  high- 
est tribunal  of  the  country  had  declared  that  every  contract  or 
combination  which  prevented  free  competition  was  a  restraint  of 
trade,  and  that,  if  the  restraint  directly  affected  commerce  among 
the  States,  then  the  contract  or  combination  was  unlawful,  under 
the  first  section  of  the  act. 


APPENDIX  M.  315 

Inasmuch  as  the  committee  is  of  opinion  that  legislation  should 
be  so  clear  in  its  terms  as  not  to  admit  of  unlimited  judicial  dis- 
cretion, it  pauses  here  a  moment  to  point  out  just  what  the  range 
of  discretion  was  under  the  decisions  ending  with  the  Northern 
Securities  case.  It  is  manifest  that  the  inquiry  that  the  court  was 
then  required  to  make  in  each  case  was  this :  Has  the  evidence 
established  a  restraint  of  trade;  that  is  to  say,  has  the  evidence 
established  a  contract  or  combination  which  interfered  with  free 
competition  ? 

There  was  some,  but  not  great  latitude  for  difference  of  opin- 
ion upon  such  an  inquiry,  and  the  uncertainty  in  the  application 
of  the  law  was  reduced  to  a  minimum ;  nor  would  the  uncertainty 
have  been  much  increased  if  the  inquiry  had  been  as  to  an  un- 
reasonable interference  with  free  competition,  which  would  have 
been  the  inquiry  had  the  common-law  understanding  been  strictly 
adopted  by  the  Supreme  Court. 

If  the  more  recent  construction  of  the  statute  were  in  harmony 
with  the  earlier  decisions,  further  legislation  might  nevertheless 
be  required;  but  it  is  unnecessary  to  make  the  inquiry.  That 
question  is  purely  academic,  for  the  later  rulings  have  completely 
reversed  the  former  ones,  in  so  far  as  the  phase  of  the  subject 
now  being  discussed  is  concerned. 

On  the  I5th  day  of  May,  1911,  the  case  of  the  Standard  Oil 
Co.  v.  The  United  States  was  passed  upon  by  the  Supreme  Court. 
Chief  Justice  White  (formerly  Justice  White)  delivered  the 
opinion  and  reiterated,  as  the  conclusion  of  the  court,  the  views 
that  he  had  so  forcibly  urged  as  a  dissenter  15  years  before.  It 
was  not  necessary  for  the  court  to  deal  with  the  question  at  all, 
inasmuch  as  it  found  the  defendants  guilty  of  a  restraint  of  trade 
under  any  and  every  meaning  of  the  term,  but  for  the  very  pur- 
pose, the  committee  assumes,  of  advising  the  country  that  a  new 
rule  had  been  adopted  so  that  business  might  be  guided  by  it,  it 
was  stated  in  the  most  emphatic  way  imaginable  that  the  statute 
which  declares  that  "Every  contract,  combination  in  the  form  of 
trust  or  otherwise,  or  conspiracy  in  restraint  of  trade  or  com- 
merce among  the  several  States  or  with  foreign  nations  is  hereby 
declared  to  be  illegal"  means  that  a  contract  or  combination  in 
order  to  be  illegal  must  cause  an  undue  restraint  of  trade.  The 
following  quotations  from  the  opinion  will  need  no  comment : 

That  in  view  of  the  many  new  forms  of  contracts  and  combinations 
which  were  being  evolved  from  existing  economic  conditions,  it  was 


316  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

deemed  essential  by  an  all-embracing  enumeration  to  make  sure  that  no 
form  of  contract  or  combination  by  which  an  undue  restraint  of  inter- 
state or  foreign  commerce  was  brought  about  could  save  such  restraint 
from  condemnation.  The  statute  under  this  view  evidenced  the  intent 
not  to  restrain  the  right  to  make  and  enforce  contracts,  whether  resulting 
from  combination  or  otherwise,  which  did  not  unduly  restrain  interstate 
or  foreign  commerce,  but  to  protect  that  commerce  from  being  restrained 
by  methods,  whether  old  or  new,  which  would  constitute  an  interference 
that  is  an  undue  restraint  (pp.  59,  60). 

Again: 

In  other  words,  having  by  the  first  section  forbidden  all  means  of  mo- 
nopolizing trade — that  is,  unduly  restraining  it  by  means  of  every  con- 
tract, combination,  etc. — the  second  section  seeks,  if  possible,  to  make  the 
prohibitions  of  the  act  all  the  more  complete  and  perfect  by  embracing 
all  attempts  to  reach  the  end  prohibited  by  the  first  section  (p.  61). 

That  the  Chief  Justice  intended  to  announce  a  rule  at  variance 
with  the  declarations  of  Justice  Peckham  and  Justice  Harlan  in 
the  Trans-Missouri  Freight  Association  and  Northern  Securities 
cases  is  made  clear  in  the  following  extracts : 

The  question  is  pertinent  and  must  be  fully  and  frankly  met,  for  if  it 
be  now  deemed  that  the  Freight  Association  case  was  mistakenly  decided 
or  too  broadly  stated,  the  doctrine  which  it  announced  should  be  either 
expressly  overruled  or  limited.  *  *  *  And  in  order  not  in  the  slightest 
degree  to  be  wanting  in  frankness,  we  say  that  in  so  far,  however,  as  by 
separating  the  general  language  used  in  the  opinion  in  the  Freight  Asso- 
ciation and  Joint  Traffic  cases  from  the  context  and  the  subject  and  parties 
with  which  the  cases  were  concerned,  it  may  be  conceived  that  the  re- 
ferred to  conflicts  with  the  construction  which  we  give  the  statute,  they 
are  necessarily  now  limited  and  qualified  (pp.  68,  69). 

The  learned  Chief  Justice  contends  that  this  rule  of  construc- 
tion, which  he  repeatedly  calls  the  "rule  of  reason,"  must  be  ap- 
plied in  order  to  prevent  the  entire  overthrow  of  the  statute. 

It  is  one  of  the  interesting  things  in  our  judicial  history  that  so 
great  had  been  the  change  in  the  personnel  of  the  court  that  when 
the  dissenting  opinion  of  Justice  White  in  1896  became  the  opin- 
ion of  the  court  in  1911  Justice  Harlan  was  the  only  member  re- 
maining to  protest  against  the  reversal.  He  recorded  his  dis- 
sent in  one  of  the  most  vigorous  opinions  that  can  be  found  in 
the  reports,  but  for  the  purposes  which  the  committee  has  in 
view  it  is  not  necessary  to  do  more  than  to  mention  it. 

Justice  Harlan  has  passed  away,  and  it  may  be  assumed  that 
the  Supreme  Court  is  now  unanimously  in  favor  of  the  doctrine 


APPENDIX  M.  317 

so  often  and  so  ably  promulgated  by  Chief  Justice  White.  The 
rule  was  reasserted  in  the  American  Tobacco  Co.  case  and  has 
not  since  been  questioned  by  any  member  of  the  court. 

It  is  true  that  in  the  important  opinion  rendered  in  the  suit  of 
the  United  States  v.  The  Union  Pacific  Railroad  Co.,  Justice 
Day  says: 

The  act  is  intended  to  reach  combinations  and  conspiracies  which  re- 
strain freedom  of  action  in  interstate  trade  and  commerce  and  unduly 
suppress  or  restrict  the  play  of  competition  in  the  conduct  thereof — 

Citing  as  authority  the  Joint  Traffic  Association  case. 

It  is  true  also  that  the  court  quotes,  with  apparent  approval, 
the  following  extract  from  Mr.  Justice  Harlan  in  the  Northern 
Securities  case : 

In  all  the  prior  cases  in  this  court  the  Anti-trust  act  has  been  considered 
as  forbidding  any  combination  which  by  its  necessary  operation  destroys 
or  restrains  free  competition  among  those  engaged  in  interstate  commerce ; 
in  other  words,  that  to  destroy  or  restrict  free  competition  in  interstate 
commerce  was  to  restrain  such  commerce. 

But  thereafter  the  court  says : 

In  the  recent  discussion  of  the  history  of  the  meaning  of  the  act  in  the 
Standard  Oil  Co.  and  Tobacco  Co.  cases  this  court  declared  that  the  stat- 
ute should  be  given  a  reasonable  construction  with  a  view  to  reaching 
those  undue  restraints  of  interstate  trade  which  are  intended  to  be  pro- 
hibited and  punished. 

The  fair  conclusion  is  that  it  is  now  the  settled  doctrine  of  the 
Supreme  Court  that  only  undue  or  unreasonable  restraints  of 
trade  are  made  unlawful  by  the  Anti-trust  act,  and  that  in  each 
instance  it  is  for  the  court  to  determine  whether  the  established 
restraint  of  trade  is  a  due  restraint  or  an  undue  restraint. 
•  Whatever  may  be  the  opinion  of  the  several  members  of  the 
committee  with  respect  to  the  soundness  of  the  rule  as  now  estab- 
lished, the  committee  as  a  whole  accepts  it  as  the  present  law  of 
the  land.  It  is  profoundly  convinced  that,  in  view  of  the  rule  and 
its  necessary  effect  upon  the  business  of  the  country,  the  inherent 
rights  of  the  people,  and  upon  the  execution  of  the  statute  it  has 
become  imperative  to  enact  additional  legislation. 

The  committee  has  full  confidence  in  the  integrity,  intelligence, 
and  patriotism  of  the  Supreme  Court  of  the  United  States,  but  it 
is  unwilling  to  repose  in  that  court,  or  any  other  court,  the  vast 


318  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

and  undefined  power  which  it  must  exercise  in  the  administration 
of  the  statute  under  the  rule  which  it  has  promulgated.  It  sub- 
stitutes the  court  in  the  place  of  Congress,  for  whenever  the  rule 
is  invoked  the  court  does  not  administer  the  law,  but  makes  the 
law.  If  it  continues  in  force,  the  Federal  courts  will,  so  far  as 
restraint  of  trade  is  concerned,  make  a  common  law  for  the 
United  States  just  as  the  English  courts  have  made  a  common 
law  for  England. 

The  people  of  this  country  will  not  permit  the  courts  to  declare 
a  policy  for  them  with  respect  to  this  subject.  If  we  do  not 
promptly  exercise  our  legislative  power,  the  courts  will  suffer  im- 
measurable injury  in  the  loss  of  that  respect  and  confidence  so 
essential  to  their  usefulness.  It  is  inconceivable  that  in  a  country 
governed  by  a  written  Constitution  and  statute  law  the  courts 
can  be  permitted  to  test  each  restraint  of  trade  by  the  economic 
standard  which  the  individual  members  of  the  court  may  happen 
to  approve.  If  we  do  not  speedily  prescribe  in  so  far  as  we  can 
a  legislative  rule  by  which  to  measure  the  forms  of  contract  and 
combination  in  restraint  of  trade  with  which  we  are  familiar  or 
which  we  can  anticipate,  we  cease  to  be  a  government  of  law  and 
become  a  government  of  men,  and,  moreover,  of  a  very  few  men, 
and  they  appointed  by  the  President. 

It  may  be  that  the  Supreme  Court  will  be  so  enlightened  and 
so  alert  that  its  opinion  respecting  what  is  due  and  what  is  undue 
restraint  of  trade  will  be  in  harmony  with  an  awakened  public 
conscience  and  a  disinterested  public  judgment,  but  to  fashion 
our  conduct  upon  that  hypothesis  is  to  repudiate  the  fundamental 
principles  of  representative  government. 

When  the  commercial  development  of  the  country  is  consid- 
ered, when  the  forms  of  industrial  activity  are  taken  into  account, 
it  must  be  admitted  by  every  student  of  affairs  that  the  policy  of 
the  government  with  respect  to  restraints  of  trade  and  commerce 
should  remain  a  judicial  question  in  those  cases  only  in  which 
Congress  can  not  prescribe  a  definite  rule. 

In  order  to  look  at  the  subject  in  the  light  of  illustration,  it  is 
suggested  that  there  will  presently  come  before  the  courts  the 
combination  centered  in  the  United  States  Steel  Corporation.  In 
the  end  nine  justices  of  the  Supreme  Court  will  be  asked  to  say 
whether  the  restraint  of  trade  brought  about  through  this  com- 
bination is  a  due  or  an  undue  restraint,  and  the  answer  which 


APPENDIX  M.  319 

each  justice  makes  to  that  question  will  depend  upon  his  indi- 
vidual opinion  as  an  economist  or  sociologist,  the  conclusion  of 
the  court  being  in  substance  an  act  of  legislation  passed  by  the 
judicial  branch  of  the  government  to  fit  a  particular  case. 

Further,  it  is  believed  by  many  thoughtful  people  that  a  sub- 
stantial identity  in  the  managing  boards  of  competing  corpora- 
tions constitutes  a  restraint  of  trade  and  is  harmful  to  the  public 
interest.  If  such  a  case  were  brought  before  the  court,  what 
would  be  the  "rule  of  reason"?  What  guide  would  the  court 
have  in  determining  whether  such  community  of  directors  or 
managers  was  a  due  or  an  undue  restraint  of  trade  ? 

Again,  suppose  there  were  a  dozen  establishments  in  a  given 
field  of  production  competing  with  each  other  and  six  of  them 
were  to  consolidate,  employing  half  of  all  the  capital  and  advanc- 
ing the  consolidated  enterprise  to  a  dominating  position  in  the 
trade,  where  would  the  judge  go  for  light  in  determining  whether 
the  restraint  of  trade  was  due  or  undue?  These  illustrations 
might  be  indefinitely  extended,  but  it  would  serve  no  useful  pur- 
pose to  multiply  them. 

The  committee  does  not  intend  in  this  report  to  indicate  the 
terms  of  the  act  or  acts  that  should  be  passed  to  supply  the  court 
with  such  legislative  tests  and  standards  as  will  limit  the  scope  of 
judicial  discretion.  To  do  so  would  be  to  report  upon  the  bills 
now  before  it,  and  that  the  committee  is  not  prepared  to  do.  It 
is  prepared,  however,  to  say  that  Congress  should,  in  as  far  as  is 
possible,  specifically  prescribe  certain  conditions  upon  which  per- 
sons and  corporations  shall  be  permitted  to  engage  in  commerce 
among  the  States  and  with  foreign  nations.  These  conditions 
should  be  of  a  character  that  will  tend  to  preserve  reasonable 
competition,  or  substantially  competitive  conditions,  and  to  com- 
pel independence  in  both  organization  and  conduct.  They  should 
be  so  clear  that  the  business  world  can  understand  them  and  go 
confidently  forward,  guided  by  them. 

Not  only  should  such  conditions  be  imposed  upon  those  who 
are  engaged  or  propose  to  engage  in  commerce  among  the  States, 
but  our  legislation  should  further  recite  certain  known  form  of 
combination  and  declare  them  to  be  unlawful  because  in  restraint 
of  trade.  With  respect  to  other  forms,  we  should  declare  that  if 
restraint  is  established  the  burden  of  proof  is  upon  the  persons 
or  corporations  involved  to  show  that  the  restraint  is  reasonable. 


320  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

These  suggestions  are  not  made  solely  for  the  better  protection 
of  that  general  body  of  our  citizens,  commonly  called  the  people, 
who  must  deal  with,  buy  from  and  sell  to  the  combinations  sought 
to  be  regulated,  but  are  made  also  in  the  interest  of  safety  and 
certainty  for  the  men  who  compose  what  is  ordinarily  known  as 
the  business  community. 

There  are  many  forms  of  combination,  and  many  practices  in 
business  which  have  been  so  unequivocally  condemned  by  the 
Supreme  Court  that  as  to  them  and  their  like  the  statute  is  so' 
clear  that  no  person  can  be  in  any  doubt  respecting  what  is  lawful 
and  what  is  unlawful ;  but  as  the  statute  is  now  construed  there 
are  many  forms  of  organization,  and  many  other  practices  that 
seriously  interfere  with  competition,  and  are  plainly  opposed  to 
the  public  welfare,  concerning  which  it  is  impossible  to  predict 
with  any  certainty  whether  they  will  be  held  to  be  due  or  undue 
restraints  of  trade. 

The  committee  does  not  conceal  the  difficulty  of  reaching  an 
agreement  concerning  the  details  of  the  legislation  just  outlined, 
but  it  has  no  hesitation  in  reporting  that  legislation  of  the  gen- 
eral character  pointed  out  is  both  wise  and  necessary. 

The  committee  further  reports  that  if  the  additional  legislation, 
the  general  scope  of  which  has  been  pointed  out,  is  enacted  it  will 
be  very  desirable  to  accompany  such  legislation  with  a  measure 
establishing  a  commission  for  the  better  administration  of  the  law 
and  to  aid  in  its  enforcement.  It  may  be  fairly  said  that  there  is 
need  of  such  a  commission,  even  though  the  present  statute  is  not 
supplemented  in  any  manner;  but  it  is  apparent  that  if  the  new 
legislation  is  enacted  the  need  of  a  commission  will  become  more 
imperative. 

There  are  three  general  fields  in  which  the  commission  could 
work  to  the  great  advantage  both  of  the  people  for  whose  pro- 
tection the  law  exists  and  the  people  against  whom  it  is  directed. 

First.  If  the  Bureau  of  Corporations  were  converted  into  an 
independent  commission  composed  of  trained,  skillful  men,  and 
clothed  with  adequate  authority,  there  could  be  gathered  more 
complete  and  accurate  knowledge  of  the  organization,  manage- 
ment, and  practices  of  the  corporations  and  associations  engaged 
in  national  and  international  commerce  than  we  now  have.  In 
saying  this  the  committee  does  not  mean  to  disparage  the  work  of 
the  Bureau  of  Corporations  as  hitherto  carried  on,  but,  valuable 


APPENDIX  M.  321 

as  the  work  has  been,  it  is  believed  that  a  greater  service  could  be 
rendered  by  a  commission  with  a  distinct  organization  with  ade- 
quate appropriations  and  added  authority.  Moreover,  it  is  clear 
that  the  constant  inquiry  into  and  investigation  of  interstate  com- 
merce in  order  to  ascertain  whether  the  law  is  being  violated 
should  be  more  closely  connected  with  prosecutions  for  violations, 
when  found  to  exist,  than  at  the  present  time. 

Second.  When  the  conditions  upon  the  fulfillment  of  which 
persons  and  corporations  may  engage  in  commerce  among  the 
States  and  with  foreign  nations  are  imposed,  as  the  committee 
has  heretofore  recommended,  there  will  be  some  of  them  upon 
which  the  government  must  act  with  administrative  promptness 
rather  than  with  judicial  deliberation  and  delay.  For  instance, 
suppose  Congress  were  to  declare,  as  the  committee  thinks  it 
ought  to  declare,  that  no  corporation  should  be  permitted  to  en- 
gage in  interstate  or  international  commerce  unless  it  be  honestly 
capitalized,  and  that  when  anything  but  money  is  accepted  for  its 
stock  that  the  value  at  which  the  property  is  so  taken  must  be  its 
fair,  reasonable  value.  It  seems  clear  that  a  corporation  pro- 
posing to  enter  business  should  have  an  opportunity  to  come  to 
some  governmental  tribunal  and  say,  here  is  the  property  pur- 
posed to  be  taken  for  stock,  and  here  is  the  price  at  which  it  is  to 
be  taken,  and  thereupon  ask  for  approval  or  disapproval  of  the 
proposition.  It  would  be  most  unjust  in  such  a  case  to  allow  the 
corporation  to  go  on  for  years  and  then  be  told  that  it  must  cease 
to  do  business  because  the  value  of  the  property  was  less  than  the 
par  value  of  the  stock  issued  for  it. 

And,  again,  suppose  that  10  out  of  20  manufacturing  establish- 
ments heretofore  in  competition  with  each  other  desire  to  consol- 
idate into  one  enterprise.  There  ought  to  be  a  way  in  which  the 
men  in  such  a  venture  could  submit  their  plan  to  the  government 
and  an  inquiry  made  as  to  the  legality  of  such  a  transaction,  and 
if  the  government  was  of  the  opinion  that  competitive  conditions 
would  not  be  substantially  impaired  there  should  be  an  approval, 
and  in  so  far  as  the  lawfulness  of  the  exact  thing  proposed  is 
concerned  there  should  be  a  decision,  and  if  favorable  to  the  pro- 
posal there  should  be  an  end  of  that  particular  controversy  for 
all  time.  Such  results  as  these  can  be  attained  in  no  other  way 
than  through  a  commission  which,  though  administrative  in  its 
character,  would,  in  some  instances,  exercise  quasi  judicial  func- 
21 


322  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

tions.  It  is  believed  that  through  the  intervention  of  such  a  body 
of  men  the  legislative  policy  with  respect  to  combinations  and 
monopolies  could  be  vastly  more  effectual  than  through  the  courts 
alone,  which  in  most  cases  will  take  no  cognizance  of  violations 
of  the  law  for  months  or  years  after  the  violations  occurred  and 
when  the  difficulty  of  awarding  reparation  for  the  wrong  is  al- 
most insurmountable. 

The  committee  has  not  attempted  to  be  comprehensive  as  to 
the  usefulness  of  the  commission  in  this  field,  and  has  made  these 
suggestions  only  to  indicate  in  the  most  general  way  the  assistance 
that  could  be  rendered  in  the  enforcement  of  the  law. 

Third.  One  of  the  most  serious  problems  in  connection  with 
suits  brought  under  the  Anti-trust  act  is  to  find  the  proper  method 
of  disintegrating  combinations  that  have  been  adjudged  unlawful. 
The  dissolution  of  a  corporation  or  a  series  of  associated  corpora- 
tions must  often  involve  the  consideration  of  plans  for  reorgan- 
ization in  order  that  the  property  which  has  been  unlawfully  em- 
ployed may  thereafter  be  lawfully  used  in  commerce.  The  courts 
are  not  fitted  for  the  work  of  reconstruction,  and  whatever  jur- 
isdiction they  now  have,  or  that  may  hereafter  be  conferred  upon 
them  with  respect  to  such  matters,  it  can  not  be  gainsaid  that  a 
commission,  the  members  of  which  are  in  close  touch  with  busi- 
ness affairs,  and  who  are  intimately  acquainted  with  the  commer- 
cial situation,  might  be  extremely  helpful  in  the  required  re- 
adjustment. 

ADDITIONAL  VIEWS  OF  MR.  POMERENE. 

With  the  report  in  general  I  am  in  accord.  But  there  is  one 
feature  of  it  about  which  I  desire  to  be  more  explicit,  and  that  is 
the  paragraph  discussing  the  certainty  of  the  provisions  of  the 
Sherman  law  as  applicable  to  certain  cases  and  its  uncertainty  as 
applicable  to  others. 

I  approve  the  view  that — 

There  are  many  forms  of  combination  and  many  practices  in  business 
which  have  been  so  unequivocally  condemned  by  the  Supreme  Court  that 
as  to  them  and  their  like  the  statute  is  so  clear  that  no  person  can  be 
in  any  doubt  respecting  what  is  lawful  and  what  is  unlawful. 

There  are  other  forms  of  organization  and  acts  which  seriously 
interfere  with  competition,  such  as  interlocking  directories,  wat- 
ering of  stock,  selling  of  merchandise  in  one  locality  at  a  less 


APPENDIX  M.  323 

price  than  in  another,  and  other  practices  which  are  so  contrary 
to  sound  business  principles  and  good  morals  that  they  can  and 
should  be  specifically  controlled  or  prohibited  by  statute.  As  to 
these,  in  the  interest  of  certainty,  there  should  be  other  and  fur- 
ther legislation.  But,  whatever  may  be  the  additional  legislation, 
there  will  be  many  other  contracts,  combinations,  and  practices 
in  "undue  and  unreasonable  restraint  of  trade,"  which  it  is  im- 
possible for  Congress  to  define  by  statute,  because  any  attempt  to 
so  define  them  will,  in  practice,  be  found  to  exclude  many  other 
contracts,  combinations,  and  practices  which  are  equally  inimical 
to  the  public  good.  As  to  these,  we  must  always  depend  upon 
the  sound  wisdom  and  discretion  of  courts  and  juries  for  relief, 
just  as  in  the  past  we  have  been  obliged  to  trust  to  their  judicial 
administration. 

To  illustrate :  We  know  that  legislatures  and  courts  have  con- 
stantly refused  to  define  fraud  because  the  multiplicity  of  acts 
and  circumstances  involved  in  human  affairs  make  it  impossible 
of  definition. 

The  same  may  be  said  with  equal  truth  as  to  what  constitutes 
"undue  or  unreasonable  restraint  of  trade." 

It  is  said  with  a  great  deal  of  force  that  men  are  not  always 
able  to  tell  in  advance  whether  certain  acts  are  in  "undue  or  un- 
reasonable restraint  of  trade."  But  however  difficult  this  may  be, 
it  is  no  reason  why  they  should  be  left  for  decision  to  the  selfish- 
ness of  interested  parties  uncontrolled  by  judicial  decision  under 
the  principles  of  the  common  law  or  under  the  broad  provisions 
of  the  Sherman  law. 

In  criminal  cases  it  is  often  difficult  to  say  in  advance  whether 
a  given  state  of  facts  constitutes  a  reasonable  doubt.  But  is  that 
a  reason  why  courts  and  juries  should  not  attempt  to  say  in  a 
specific  case  whether  there  was,  in  fact,  a  reasonable  doubt  or 
not? 

In  negligence  cases  it  is  equally  difficult  to  say  whether  a  given 
state  of  facts  constitutes  contributory  negligence  on  the  part  of 
the  plaintiff  or  reasonable  care  on  the  part  of  the  defendant.  But 
can  this  be  urged  as  a  reason  for  not  leaving  special  cases  to  the 
judgment  of  the  court  and  jury? 

In  my  judgment,  what  is  "undue  or  unreasonable  restraint  of 
trade"  must,  in  many  cases  if  not  in  most  cases,  be  left  largely 
for  judicial  determination  and  sound  judgment  and  good  morals 


324  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

will  be  a  sufficient  guide  for  those  who  are  actuated  by  a  proper 
public  spirit  rather  than  by  selfish  motives. 

While  I  believe  there  can  be  some  additional  legislation  along 
the  lines  indicated,  I  am  firmly  of  the  opinion  that  the  Sherman 
Law  is  a  clear  and  certain  guide  for  reasonable  men  who  desire 
to  comply  with  the  law  and  do  not  exert  themselves  to  evade  its 
provisions.  ATLEE  PoMERENE. 

ADDITIONAL  VIEWS  OF  MR.  TILLMAN. 

The  undersigned,  after  carefully  considering  the  Anti-trust 
statute  or  Sherman  Law,  agrees  to  the  first  proposition  laid  down 
by  the  committee  contained  on  the  second  page  of  this  report,  and 
to  that  portion  of  the  second  proposition  beginning  with  the 
words,  "it  is  neither  necessary  nor  desirable  at  this  time  to  pro- 
vide for  the  organization  under  act  of  Congress  of  industrial  cor- 
porations which  propose  to  engage  in  commerce  among  the  States 
and  with  foreign  nations."  It  would  be  unwise  for  Congress  to 
interfere  by  Federal  corporation  acts,  and  he  believes  it  wiser  to 
leave  such  things  where  they  now  are,  to  the  States. 

With  the  third  proposition  the  undersigned  is  not  now  prepared 
to  express  concurrence,  preferring  to  wait  until  the  specific  con- 
ditions and  regulations  contemplated  are  presented  for  decision. 

He  assents  to  the  lucid  and  masterly  exposition  in  the  report  of 
the  vacillation  of  the  Supreme  Court  of  the  United  States,  which 
has  made  the  minority  opinions  of  15  years  ago  become  the  ma- 
jority opinions  now.  That  powerful  tribunal  has  thus  reversed 
the  law  on  a  most  important  question  relative  to  crimes  in  con- 
nection with  trusts  and  monopolies,  and  instead  of  a  congres- 
sional statute  we  have  judge-made  law.  These  opinions  vvere  ren- 
dered in  lawsuits  of  all  sorts;  and  thus  made  by  piecemeal,  in- 
stead of  properly  explaining  and  defining  the  scope  of  the  Anti- 
trust law,  have  made  it  a  judicial  question  to  be  decided  by  the 
judges  trying  the  case,  whether  a  proven  destruction  of  competi- 
tion operating  as  a  restraint  of  trade  is  to  be  prohibited  and  pun- 
ished because  contrary  to  law,  or  is  to  be  allowed  to  go  unwhip- 
ped  of  justice  because  the  judges  think  it  is  not  an  "unreasonable" 
crime,  but  one  which  may  be  permitted. 

The  undersigned  agrees  that  Congress  should  legislate  so  as  to 
destroy  any  such  preposterous  and  dangerous  judicial  discretion, 
because  such  discretion  was  never  contemplated  by  the  Constitu- 
tion. 


APPENDIX  M.  325 

The  undersigned  is  not  now  prepared  to  say  that  a  new  national 
commission  should  be  established  for  the  better  administration  of 
the  Anti-trust  law.  He  is  inclined  to  believe  that  we  have  too 
many  commissions  now,  composed  largely  of  so-called  "lame 
ducks,"  both  Democrats  and  Republicans,  who  have  been  defeated 
at  the  polls  and  are  given  these  places  mainly  as  a  compensation 
and  means  of  support.  He  thinks  Congress  ought  to  perform  its 
own  functions  rather  than  surrender  them  to  commissions  thus 
created  by  Executive  appointment. 

He  does  not  assent  to  the  particular  language  used  on  any 
point  in  the  report  of  the  committee,  except  where  he  has  spe- 
cifically so  stated. 

As  the  committee  is  not  now  ready  to  propose  specific  measures 
of  legislation,  he  prefers  to  wait  and  to  listen  to  the  recommenda- 
tions of  the  incoming  President  of  the  United  States. 

B.  R.  TII^MAN. 

ADDITIONAL  VIEWS  OF  MR.  GORE. 

I  concur  in  the  main  body  of  the  report  and  in  the  conclusions 
arrived  at,  except  as  to  the  specific  recommendation  looking  to 
the  establishment  of  a  commission.  Upon  that  recommendation 
I  reserve  my  judgment  for  the  present.  I  could  not  yield  my  as- 
sent to  this  proposition  without  first  considering  both  the  prin- 
ciples and  details  of  any  measure  proposing  such  a  commission. 
My  ultimate  assent  would  depend  upon  the  constitution  and  char- 
acter of  the  commission  and  upon  the  extent  and  limitation  of  its 
powers  and  purposes.  It  may  be  possible  that  a  commission 
could  with  propriety  be  vested  with  power  to  pass  upon  the  form 
of  a  proposed  organization,  but  no  commission  should  have  au- 
thority to  grant  indulgences  as  to  the  methods,  conduct,  and  oper- 
ations of  any  such  organization.  T.  P.  GORE. 

ADDITIONAL  VIEWS  OF  MR.  NEWLANDS. 

Whilst  I  agree  with  the  general  conclusion  reached  by  Mr. 
Cummins  in  his  report,  I  have  not  been  able  to  study  with  suffi- 
cient care  the  decisions  of  the  Supreme  Court  relating  to  the 
trusts  to  enable  me  to  form  an  independent  opinion  as  to  his 
analysis  of  them.  For  years  I  have  contended  that  if  at  the  time 
the  Sherman  Act  was  passed  (the  date  of  its  passage  being  almost 


326  MANUAL  OF  FF.DF.RAI,  TRADE  COMMISSION. 

contemporaneous  with  that  of  the  interstate  commerce  act  re- 
garding the  railroads)  we  had  organized  an  interstate  trade  com- 
mission similar  to  the  Interstate  Commerce  Commission,  and  with 
somewhat  similar  powers  of  investigation  and  correction,  we 
would  have  prevented  or  remedied  many  of  the  abuses  which 
have  since  grown  up,  and  that  we  would  have  gradually  evolved 
a  system  of  commercial  law,  through  administrative  process,  as 
complete  as  that  which  has  been  built  up  regarding  our  system  of 
transportation. 

I  presented  my  views  relating  to  this  matter  at  the  first  hearing 
of  this  committee  regarding  the  control  of  corporations  on  the  4th 
day  of  August,  1911,  and  on  the  i6th  of  November,  1911  (hear- 
ings, pp.  i  to  26,  inclusive).  I  then  discussed  a  bill  for  the  or- 
ganization of  an  interstate  trade  commission  (Senate  bill  No. 
2941),  which  was  introduced  by  me  on  the  5th  of  July,  1911,  and 
a  substitute  bill  of  the  same  number,  introduced  by  me  August 

21,   I9II 

As  a  result  of  the  additional  light  shed  upon  this  subject  by 
the  hearings,  I  introduced  in  the  Senate,  on  February  26,  1912, 
a  bill  (Senate  bill  5485,  62d  Cong.,  2d  sess.)  entitled  "A  bill  to 
create  an  Interstate  Trade  Commission,"  etc. 

Later  on,  as  a  result  of  subsequent  consideration,  this  bill  has 
been  amended  and  I  present  it  with  the  alterations  as  a  ten- 
tative proposal  for  criticism  and  suggestion.  The  bill  as  amended 
is  annexed  hereto. 

Whilst  I  believe  that  the  Sherman  Anti-trust  Act  should  not  be 
altered,  I  believe  that  it  should  be  supplemented  by  such  legisla- 
tion as  is  shown  to  be  necessary  by  the  experience  of  the  time. 
Such  variety  of  view  exists  as  to  what  this  supplementary  legisla- 
tion shall  be  that  I  do  not  believe  early  legislation  on  this  line  is 
practicable.  But  I  do  believe  that  all  can  agree  upon  an  Interstate 
Trade  Commission  with  powers  of  investigation  and  correction, 
and  with  the  power  to  aid  the  courts  in  the  administration  of  the 
Sherman  Act  and  other  supplementary  legislation ;  and  1  believe 
that  such  a  commission  should  be  organized  immediately,  so  that 
Congress  can  soon  have  the  benefit  of  the  recommendations 
which  it  will  make  as  the  result  of  its  experience. 

I  shall  not  enter  into  any  labored  argument  upon  this  ques- 
tion. I  shall  simply  content  myself  with  quoting  from  previous 
utterances  in  the  Senate. 


APPENDIX  M.  327 

In  the  Senate,  January  n,  1911; 

MR.  NEWLANDS.  *  *  *  The  Railroad  Commission  bill  furnishes  a 
model  for  the  action  of  Congress  upon  matters  involving  minute  and 
scientific  investigation.  Had  we  followed  the  same  method  regarding 
trusts  that  we  followed  regarding  railroads,  we  would  have  made  much 
better  progress  in  trust  regulation.  The  Anti-trust  act  was  passed  21 
years  ago,  about  the  same  time  that  the  Railroad  Commission  was  organ- 
ized. The  railroad  question  is  practically  settled;  the  settlement  of  the 
trust  question  has  hardly  been  commenced.  Had  we  submitted  the  admin- 
istration of  the  Anti-trust  act  to  an  impartial  quasi  judicial  tribunal  sim- 
ilar to  the  Interstate  Commerce  Commission  instead  of  to  the  Attorney- 
General's  office,  with  its  shifting  officials,  its  varying  policies,  its  lack  of 
tradition,  record,  and  precedent,  we  would  by  this  time  have  made  grati- 
fying progress  in  the  regulation  and  control  of  trusts,  through  the  quasi 
judicial  investigations  of  a  competent  commission  and  through  legislation 
based  upon  its  recommendations.  As  it  is  with  the  evasive  and  shifting 
incumbency  and  administration  of  the  Attorney-General's  office,  often- 
times purely  political  in  character,  we  find  that  the  trusts  are  more  power- 
ful to-day  than  when  the  Anti-trust  act  was  passed,  and  that  evils  have 
grown  up  so  interwoven  with  the  general  business  of  the  country  as  to 
make  men  tremble  at  the  consequence  of  their  disruption. 

In  the  Senate,  May  16,  1911 : 

MR.  NEWLANDS.  Mr.  President,  whilst  I  was  addresisng  the  Senate  yes- 
terday upon  the  importance  of  taking  up  immediately  certain  questions 
upon  which  public  opinion  has  been  formed,  and  crystallizing  them  into 
legislation,  I  referred,  among  others,  to  the  great  questions  of  the  com- 
binations of  capital  called  trusts  which  have  assumed  of  late  years  so 
powerful  and  menacing  an  aspect.  *  *  * 

The  Supreme  Court  yesterday  acted  upon  this  matter  with  reference  to 
one  of  the  great  trusts  in  a  decision  which  applies  to  them  all,  and,  as  the 
result  probably  of  the  inertia  and  the  inaction  of  Congress,  has  taken 
upon  itself  what  the  dissenting  member  of  that  court,  Mr.  Justice  Harlan, 
declared  to  be  judicial  legislation,  and  has  written  into  the  statute  words 
which  Congress  never  put  there;  and  so  to-day  we  have  a  decision  up- 
holding the  Anti-trust  act  so  far  as  it  applies  to  unreasonable  restraint  of 
trade. 

The  question,  therefore,  presents  itself  to  us  whether  we  are  to  permit 
in  the  future  the  administration  regarding  these  great  combinations  to 
drift  practically  into  the  hands  of  the  courts  and  subject  the  question  as  to 
the  reasonableness  or  unreasonableness  of  any  restraint  upon  trade  im- 
posed by  these  corporations  now  existing  and  to  be  brought  into  existence 
in  the  future  to  the  varying  judgments  of  different  courts  upon  the  facts 
and  the  law,  or  whether  we  will  organize,  as  the  servant  of  Congress,  an 
administrative  tribunal  similar  to  the  Interstate  Commerce  Commission, 
with  powers  of  recommendation,  with  powers  of  condemnation,  with 


328  MANUAL  OF  FEDERAL,  TRADE;  COMMISSION. 

powers  of  correction  similar  to  those  enjoyed  by  the  Interstate  Commerce 

Commission  over  interstate  transportation. 

**.**«* 

*  *  *  What  has  been  our  experience  regarding  that  branch  of  inter- 
state commerce  which  covers  transportation?  Our  experience  has  been 
that  20  years  ago,  just  about  the  time  the  Anti-trust  act  was  passed,  Con- 
gress passed  the  Interstate  Commerce  Act,  creating  a  Commission  as  its 
servant  to  attend  to  its  duties  under  rules  prescribed  by  Congress.  The 
regulation  of  interstate  commerce  belonged  to  Congress.  Congress  wisely 
saw  that  it  could  not  undertake  that  regulation  in  all  its  details;  that  it 
could  not  pass  rate  bills  which  would  be  satisfactory  to  every  section  of 
the  country;  that  it  could  not  reduce  rates  that  were  claimed  to  be  ex- 
cessive and  increase  rates  that  were  claimed  to  be  too  low;  that  it  could 
not  correct  the  varying  abuses  which  creep  into  the  administration  of 
every  great  enterprise.  Therefore  it  cieated  this  Commission  as  its  serv- 
ant, to  carry  out  its  will  under  rules  established  by  it. 

The  history  of  the  last  23  years  proves  the  wisdom  of  our  action.  By 
a  gradual  process  of  evolution  this  Commission,  as  the  result  of  gradual 
improvements  in  legislation  and  as  the  result  of  constantly  increasing 
powers  recommended  by  it  and  affirmed  by  Congress,  has  become  a  tribunal 
second  in  importance  only  to  the  Supreme  Court  of  the  land.  It  has  made 
transportation  a  science.  It  has  studied  all  the  intricate  questions  relating 
to  it,  and  in  a  recent  illuminating  decision  has  formulated  a  great  State 
paper  that  has  impressed  the  country  and  the  world  with  its  wisdom. 

Now,  contrast  that  action  with  other  action  taken  by  Congress  regarding 
the  trusts.  It  would  have  been  possible  23  years  ago,  when  the  Interstate 
Commerce  Act  was  passed,  with  reference  to  interstate  trade,  to  have  es- 
tablished an  industrial  or  trade  commission  or  board  similar  to  the  Inter- 
state Commerce  Commission  with  reference  to  transportation.  If  we  had 
done  so  and  had  put  upon  that  Commission  the  same  class  of  men  who 
have  been  appointed  upon  the  Interstate  Commerce  Commission,  we  would 
have  had  the  constant  corrective  power  of  that  Commission  applied  both 
to  the  existing  trade  corporations  and  to  the  trade  corporation  afterward* 
created.  Many  abuses  would  have  been  prevented.  Many  abuses  would 
have  been  corrected.  As  a  result  of  the  constant  study  and  inquiry  of  a 
competent  board  engaged  in  this  work  as  a  specialization  recommendations 
would  have  been  made  to  Congress  which  would  have  been  accepted,  as 
were  those  recommendations  made  with  reference  to  interstate  transporta- 
tion, and  a  great  body  of  administrative  law  would  have  been  built  up  and 
combinations  of  capital  would  have  been  effected  without  the  abuses  which 
have  existed  during  the  past  23  years.  *  *  * 

In  the  Senate,  June  22,  1911: 

MR.  NEWLANDS.  What  is  the  second  one  which  I  suggested?  I  sug- 
gested legislation  providing,  in  connection  with  the  Bureau  of  Corpora- 
tions, for  a  board  of  interstate  trade,  with  powers  of  examination,  cor- 
rection, and  recommendation  with  regard  to  interstate  trade  similar  to 
those  conferred  upon  the  Interstate  Commerce  Commission  regarding  in- 


APPENDIX  M.  329 

terstate  transportation.  This  resolution  was  offered  before  the  recent  de- 
cision of  the  Supreme  Court  regarding  the  trusts,  and  I  then  declared 
that,  whatever  might  be  the  decision  of  that  court,  the  creation  of  such 
a  Commission  was  essential.  Interstate  trade  is  just  as  much  a  part  of 
interstate  commerce  as  interstate  transportation.  The  abuses  of  inter- 
state trade  have  become  just  as  great  as  the  abuses  of  interstate  trans- 
portation in  the  past  have  been.  Obviously  the  teachings  of  experience 
lead  us  to  the  organization  of  a  Commission  or  board  similar  to  the  In- 
terstate Commerce  Commission,  with  a  view  of  taking  hold  of  the  great 
combinations  of  capital  and  making  them  obedient  to  the  law,  giving  such 
a  Commission  powers  of  examination,  recommendation,  and  condemnation 
similar  to  those  enjoyed  by  the  Interstate  Commerce  Commission. 

Since  that  decision  the  trust  managers  themselves  have  seen  a  great 
light,  and  in  public  examinations  have  stated  that  in  their  judgment  the 
time  has  come  for  as  complete  regulation  of  corporations  engaged  in  in- 
terstate trade  as  of  corporations  engaged  in  interstate  transportation. 
Whether  that  regulation  will  ever  extend  so  far  as  the  regulation  of 
the  price  itself  is  a  matter  to  be  determined  in  the  future,  for  Congress 
will  be  called  upon  to  decide  how  great  these  corporations  shall  be,  what 
the  extent  of  their  capital  shall  be,  what  number  of  plants  they  shall  own, 
and  what  shall  be  the  extent  of  their  operations.  If  they  conclude  to 
maintain  the  principle  of  competition,  even  though  it  leads  to  destruction, 
there  will  then,  of  course,  be  no  necessity  of  regulating  prices.  But  if 
they  recognize  the  principle  of  helpful  co-operation  instead  of  destructive 
competition,  then  it  will  be  necessary  for  them  in  extreme  cases  to  face 
the  question  of  the  regulation  of  prices  just  as  the  prices  of  any  public 
utility  are  regulated. 

I  do  not  venture  to  express  an  opinion  now  as  to  what  course  should  be 
pursued  with  reference  to  this  great  question,  but  it  is  time  that  the 
Interstate  Commerce  Committee  of  the  Senate  were  entering  upon  an  in- 
quiry of  the  most  important  question  in  economics  that  has  engaged  the 
attention  of  the  country  since  the  railroad  question  was  first  presented 
to  it. 

Quotation  from  Mr.  Newlands's  statement  before  the  commit- 
tee on  the  I5th  day  of  November,  1911  (hearings,  p.  25)  : 

I  may  later  on  have  something  further  to  lay  before  this  committee  re- 
garding this  bill;  but  I  wish  to  state  at  present  that  since  the  bill  was 
introduced  there  has  been  a  wide  discussion  throughout  the  country  upon 
two  divergent  lines  of  thought,  one  insisting  upon  absolutely  free  and  un- 
restricted competition  as  the  regulator  of  corporate  business,  and  the  other 
inclining  toward  allowing  large  combinations  of  capital  and  applying  there- 
to government  supervision  and  direction  as  the  prime  regulator.  It  is 
difficult  to  say  now  which  of  these  opposing  tendencies  should  or  will  ulti- 
mately prevail.  The  bill  which  I  have  introduced  is,  in  my  judgment, 
adapted  to  this  undeveloped  situation.  It  will  help  us  to  determine  which 
of  these  theories  is  the  correct  one ;  it  will  furnish  to  Congress  and  to  the 
public  the  accurate  and  broad  information  on  corporate  conditions  that  is 


330  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

necessary  to  determine  the  line  of  further  advance.  It  does  not  affect  the 
operation  or  the  enforcement  of  the  Sherman  L,aw;  its  work  of  publicity 
and  supervision  will  tend  to  promote  fair  competition  and  keep  equally 
open  to  all  the  highways  of  commerce.  On  the  other  hand,  it  takes  the 
situation  as  it  is,  recognizes  that  there  is  a  large  degree  of  combination  al- 
ready existing,  and  makes  that  condition  a  subject  for  supervision,  study, 
and  report  to  Congress.  Its  frankly  tentative  character  and  its  modera- 
tion recommend  it  as  a  step  upon  which  all  can  unite  in  doing  what  is  im- 
peratively needed  for  the  present,  without  prejudicing  the  future. 

I  trust  that  the  committee  will  see  the  wisdom,  without  waiting  for  the 
end  of  this  investigation,  of  recommending  this  tentative  measure,  which 
will  aid  in  the  final  solution  of  all  the  pressing  questions  relating  to  trade 
corporations. 

APPENDIX  TO  REPORT  OF  COMMITTEE. 

The  following  is  the  Interstate  Trade  Commission  bill  as  intro- 
duced by  Senator  Newlands  and  tentatively  amended  by  the  Sen- 
ate Committee  on  Interstate  Commerce : 

[S.  5485,  Sixty-second  Congress,  second  session.] 

A  BILL,  To  create  an  Interstate  Trade  Commission,  to  define  its  powers 
and  duties,  and  for  other  purposes. 

Be  it  enacted  by  the  Senate  and  House  of  Representative  of  the  United 
States  of  America  in  Congress  assembled,  That  this  act  shall  be  referred 
to  and  cited  as  the  Interstate  Trade  Commission  Act.  Corporations  a 
majority  of  whose  voting  securities  is  held  or  owned  by  any  corporation 
subject  to  the  terms  of  this  act  are  referred  to  herein  as  subsidiaries  of 
such  holding  or  owning  corporation. 

SEC.  2.  That  there  is  hereby  created  a  body  to  be  known  as  the  Inter- 
state Trade  Commission,  which  shall  consist  of  three  members,  of  whom 
no  more  than  one  two  shall  belong  to  the  same  political  party.  The  Com- 
mission shall  be  appointed  by  the  President,  by  and  with  the  arvice  and 
consent  of  the  Senate,  and  the  terms  of  such  commissioners  so  first  ap- 
pointed shall  be  three,  siz,  and  nine  years,  respectively,  and  shall  be  so 
designated  by  the  President  in  making  such  appointments ;  and  thereafter 
all  the  commissioners  shall  hold  office  for  the  term  of  nine  years,  and 
shall  be  appointed  by  the  President,  by  and  with  the  advice  and  consent  of 
the  Senate.  Vacancies  shall  be  filled  by  like  appointment  and  confirmation 
for  the  unexpired  term.  Each  member  of  said  Commission  shall  receive  a 
salary  of  $10,000  a  year.  The  office  of  the  Commission  shall  be  at  Wash- 
ington, in  the  District  of  Columbia,  but  the  Commission  may  hold  meet- 
ings elsewhere  when  necessary  and  convenient. 

SEC.  3.  That  the  Bureau  of  Corporations  is  hereby  transferred  to  and 
merged  in  said  Commission,  and  all  of  the  powers,  duties,  records,  papers, 
and  funds  belonging  or  pertaining  to  the  Bureau  of  Corporations  shall 
hereafter  belong  and  pertain  to  the  Interstate  Trade  Commission,  and  all 


APPENDIX  M.  331 

the  officers  and  employees  of  said  bureau  shall  thereupon  be  officers  and 
employees  of  the  Interstate  Trade  Commission.  The  said  Commission 
shall  also  have  a  secretary,  a  chief  clerk,  and  such  clerks,  inspectors,  ex- 
aminers, experts,  messengers,  and  other  assistants  as  from  time  to  time 
may  be  necessary  and  as  may  be  appropriated  for  by  Congress. 

SEC.  4.  That  all  corporations  engaged  in  commerce  among  the  several 
States  or  with  foreign  nations,  excepting  common  carriers,  shall  from  time 
to  time  furnish  to  the  Commission  such  information,  statement,  and  rec- 
ords of  their  organization,  business,  financial  condition,  conduct,  and  man- 
agement and  the  organization,  business,  financial  condition,  conduct,  and 
management  of  their  subsidiaries  at  such  time,  to  such  degree  and  extent, 
and  in  such  form  as  may  be  prescribed  by  the  Commission ;  and  the  Com- 
mission at  all  reasonable  times,  or  its  duly  authorized  agent  or  agents, 
shall  have  complete  access  to  all  records,  accounts,  minutes,  books,  and 
papers  of  such  corporations  and  their  subsidiaries,  including  the  records 
of  any  of  their  executive  or  other  committees.  Failure  or  neglect  on  the 
part  of  any  corporation  subject  to  this  act,  or  of  any  of  its  subsidiaries, 
to  comply  with  the  terms  of  this  section  within  such  time  after  written 
demand  shall  have  been  made  upon  such  corporation  by  the  Commission 
requiring  such  compliance,  as  shall  be  fixed  by  the  Commission,  shall  con- 
stitute a  misdemeanor,  and  upon  conviction  such  corporation  shall  be 
subject  to  a  fine  of  not  more  than  $1,000  for  every  day  of  such  failure  or 
neglect. 

SEC.  5.  The  information  so  obtained  shall  be  public  records,  and  the 
Commission  shall  from  time  to  time  make  public  such  information  in  such 
form  and  to  such  extent  as  it  may  deem  necessary. 

SEC.  6.  That  the  district  courts  of  the  United  States,  upon  the  applica- 
tion of  the  Commission  alleging  a  failure  to  comply  with  any  order  of 
the  Commission  or  alleging  a  failure  to  comply  with  or  a  violation  of  any 
of  the  provisions  of  this  act  by  any  corporation  subject  thereto,  shall  have 
jurisdiction  to  issue  a  writ  or  writs  of  mandamus  or  injunction  or  other 
order  enforcing  such  order  of  the  Commission  or  commanding  such  cor- 
poration, its  officers  and  employees,  to  comply  with  the  provisions  of  this 
act. 

SEC.  7.  That  for  the  purposes  of  this  act  the  Commission  shall  have  the 
power  to  require  by  subpoena  the  attendance  and  testimony  of  witnesses 
and  the  production  of  all  books,  papers,  contracts,  agreements,  documents, 
or  other  things  of  every  kind  and  nature  whatsoever  relating  to  any  mat- 
ter under  investigation  by  the  Commission.  Such  attendance  of  witnesses 
and  the  production  of  such  documentary  evidence  may  be  required  from 
any  place  in  the  United  States  at  any  designated  place  of  hearing,  and  in 
case  of  disobedience  to  a  subpoena  the  Commission,  or  any  party  to  a  pro- 
ceeding before  the  Commission,  may  invoke  the  aid  of  any  court  of  the 
United  States  in  requiring  the  attendance  and  testimony  of  witnesses  and 
the  production  of  books,  papers,  and  documents  under  the  provisions  of 
this  section. 

And  any  of  the  circuit  courts  of  the  United  States  within  the  jurisdic- 
tion of  which  such  inquiry  is  carried  on  may,  in  case  of  contumacy  or  re- 
fusal to  obey  a  subpoena  issued  to  any  corporation  subject  to  the  pro- 


332  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

visions  of  this  act,  or  other  person,  issue  an  order  requiring  such  corpora- 
tion, or  other  person,  to  appear  before  said  Commission  (and  produce 
books,  documents,  and  papers,  if  so  ordered)  and  give  evidence  touching 
the  matter  in  question,  and  any  failure  to  obey  such  order  of  the  court 
may  be  punished  by  such  court  as  a  contempt  thereof.  The  claim  that 
any  such  testimony  or  evidence  may  tend  to  criminate  the  person  giving 
such  evidence  shall  not  excuse  such  witness  from  testifying. 

The  testimony  of  any  witness  may  be  taken  at  the  instance  of  a  party 
in  any  proceeding  or  investigation  pending  before  the  Commission  by 
deposition  at  any  time  after  the  inquiry  is  instituted.  The  Commission 
may  also  order  testimony  to  be  taken  by  deposition  in  any  proceeding  or 
investigation  pending  before  it  at  any  stage  of  such  proceeding  or  in- 
vestigation. Such  deposition  may  be  taken  before  any  person  authorized 
so  to  do  by  the  the  Commission  and  who  has  power  to  administer  oaths. 

Any  person  may  be  compelled  to  appear  and  depose,  and  to  produce 
documentary  evidence,  in  the  same  manner  as  witnesses  may  be  compelled 
to  appear  and  testify  and  produce  documentary  evidence  before  the  Com- 
mission as  hereinbefore  provided.  Such  testimony  shall  be  reduced  to 
writing. 

Witnesses  whose  testimony  is  taken  under  the  provisions  of  this  act 
shall  severally  be  entitled  to  the  same  fees  as  are  paid  for  like  service  in 
the  courts  of  the  United  States. 

No  person  shall  be  excused  from  attending  and  testifying,  or  from 
producing  books,  papers,  documents,  or  other  things  before  this  Commis- 
sion or  in  obedience  to  the  subpoena  of  the  Commission  whether  such 
subpoena  be  sijned  or  issued  by  one  or  more  of  the  commissioners  on 
the  ground  or  for  the  reason  that  the  testimony  or  evidence,  documentary 
or  otherwise,  required  of  him  may  tend  to  criminate  him  or  subject  him 
to  a  penalty  or  forfeiture.  But  no  natural  person  shall  be  prosecuted  or 
subjected  to  any  penalty  or  forfeiture  for  or  on  account  of  any  transac- 
tion, matter,  or  thing  concerning  which  he  may  testify  under  oath  or  pro- 
duce evidence,  documentary  or  otherwise,  before  said  Commission  in  obe- 
dience to  a  subpoena  issued  by  it  in  a  proceeding  instituted  upon  its  own 
initiative:  Provided,  That  no  person  so  testifying  shall  be  exempt  from 
prosecution  and  punishment  for  perjury  committed  in  so  testifying.  The 
purpose  of  this  provision  is  to  give  immunity  only  to  natural  persons  who 
under  oath  testify  in  response  to  a  subpoena  of  the  Commission  in  an  in- 
quiry instituted  by  the  Commission. 

SEC.  8.  That  the  said  Commission  shall,  on  or  before  the  first  day  of 
January  in  each  year,  make  a  report,  which  shall  be  transmitted  to  Con- 
gress. This  report  shall  contain  such  information  and  data  collected  by 
the  Commission  as  it  may  deem  of  value  in  the  determination  of  ques- 
tions connected  with  the  regulation  of  commerce,  together  with  such 
recommendations  as  to  additional  legislation  relating  thereto  as  the  Com- 
mission may  deem  necessary. 

SEC.  9.  That  any  person  willfully  making  or  furnishing  to  said  Com- 
mission any  statement,  return,  or  record  required  by  this  act,  when  know- 
ing such  statement,  return,  or  record  to  be  false  in  any  material  particular, 


APPENDIX  M.  333 

shall  be  guilty  of  a  misdemeanor,  and  upon  conviction  shall  be  fined  not 
more  than  $1,000  or  imprisoned  not  more  than  one  year,  or  both. 

SEC.  10.  That  in  case  a  final  decree  shall  be  issued  against  any  corpora- 
tion under  the  act  entitled  "An  act  to  protect  trade  and  commerce  against 
unlawful  restraints  and  monopolies,"  approved  July  second,  eighteen  hun- 
dred and  ninety,  or  under  Sections  seventy-three  to  seventy-seven,  inclu- 
sive, of  "An  act  to  reduce  taxation,  to  provide  revenue  for  the  govern- 
ment, and  for  other  purposes,"  which  became  a  law  August  twenty-seventh, 
eighteen  hundred  and  ninety-four,  the  court  entering  such  decree  may,  in 
its  discretion,  refer  to  the  Commission  its  decree,  with  instructions  to  take 
evidence,  consider  such  facts,  and  report  to  the  court  the  findings  as  to 
method  of  dissolution  or  reorganization  as  the  Commission  shall  consider 
best  fitted  to  carry  out  such  decree;  if  a  reorganization  takes  place  under 
a  decree,  the  Commission  shall  inform  itself  respecting  the  reorganization, 
and  if  it  is  of  the  opinion  that  it  is  not  in  harmony  with  the  decree  it 
shall,  through  counsel,  inform  the  court  for  such  action  as  the  court  may 
take. 

SEC.  ii.  That  the  said  Commission  may  at  any  time,  upon  complaint  of 
any  person  or  corporation,  or  upon  its  own  initiative,  or  upon  the  request 
of  the  Attorney-General,  or  of  the  corporation  affected,  investigate  any 
corporation  subject  to  the  provisions  of  this  act  for  the  purpose  of  de- 
termining whether  such  corporation  has  been  guilty  of  a  violation  of  the 
act  entitled  "An  act  to  protect  trade  and  commerce  against  unlawful  re- 
straints and  monopolies,"  approved  July  second,  eighteen  hundred  and 
ninety,  or  under  Sections  seventy-three  to  seventy -seven,  inclusive,  of  an 
"Act  to  reduce  taxation,"  and  so  forth,  which  became  a  law  August 
twenty-seventh,  eighteen  hundred  and  ninety-four,  or  of  any  of  the  pro- 
visions of  this  act,  and  may  hold  such  hearings  and  take  such  evidence  as 
it  may  deem  necessary;  and  in  case  the  Commission  shall  find  that  such 
corporation  has  been  guilty  of  a  violation  of  the  provisions  of  said  acts 
or  of  this  act  it  shall  make  a  finding,  stating  the  facts,  and  prescribing  the 
acts,  transactions,  and  readjustments  necessary  in  order  that  said  corpora- 
tion may  thereafter  comply  with  the  terms  of  said  acts  and  of  this  act, 
and  shall  transmit  a  copy  of  the  said  finding  in  full  to  such  corporation. 
If  within  sixty  days  after  transmitting  said  finding,  or  such  extension 
thereof  as  shall  be  given  by  the  Commission,  the  corporation  shall  not 
have  complied  with  the  terms  of  the  finding,  and  shall  not  have  performed 
the  acts  prescribed  as  necessary  to  make  it  comply  with  the  said  acts  or 
with  this  act,  the  Commission  shall  report  the  fact  of  noncompliance  to  the 
Attorney-General,  together  with  a  copy  of  such  finding,  for  his  action 
under  the  said  acts  or  of  this  act.  But  the  Commission  may,  if  it  deems 
it  proper,  report  the  facts  to  the  Attorney  General  without  calling  upon 
such  corporation  for  compliance  with  said  acts  or  with  this  act. 

Nothing  contained  in  this  act  shall  be  construed  to  prevent  or  inter- 
fere with  the  Attorney-General  in  enforcing  the  provisions  of  the  act  to 
protect  commerce,  and  so  forth,  approved  July  second,  eighteen  hundred 
and  ninety. 


334  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

MINORITY  VIEWS. 

The  undersigned  members  of  the  Senate  Committee  on  Inter- 
tate  Commerce  are  unable  to  agree  to  the  report  of  the  majority 
of  the  committee  on  Senate  resolution  98,  as  to  "what  changes 
are  necessary  or  desirable  in  the  laws  of  the  United  States  re- 
lating to  the  creation  and  control  of  corporations  engaged  in 
interstate  commerce  and  what  changes  are  necessary  or  desirable 
in  the  laws  of  the  United  States  relating  to  persons  or  firms 
engaged  in  interstate  commerce." 

While  certain  features  of  the  report  are  commendable,  there 
are  several  conclusions  therein  which  do  not  accord  with  our 
views,  and  therefore  we  are  prevented  from  approving  the  re- 
port as  a  whole. 

W.  M.  CRANE. 

FRANK  B.  BRAND.EGEE. 

GEORGE  T.  OUVER. 

HENRY  F.  LIPPITT. 

MEMBERSHIP  OF  THE  SENATE  COMMITTEE  ON  IN- 
TERSTATE  COMMERCE. 

Moses  E.  Clapp,  of  Minnesota,  Chairman;  Shelby  M.  Cul- 
lom,  of  Illinois;  W.  Murray  Crane,  of  Massachusetts;  George 
S.  Nixon,  of  Nevada;  Albert  B.  Cummins,  of  Iowa;  Frank  B. 
Brandegee,  of  Connecticut;  George  T.  Oliver,  of  Pennsylvania; 
Henry  F.  Lippitt,  of  Rhode  Island;  Charles  E.  Townsend,  of 
Michigan;  Benjamin  R.  Tillman,  of  South  Carolina;  Murphy 
].  Foster,  of  Louisiana ;  Francis  G.  Newlands,  of  Nevada ;  James 
P.  Clarke,  of  Arkansas;  Thomas  P.  Gore,  of  Oklahoma;  Clar- 
ence W.  Watson,  of  West  Virginia;  Atlee  Pomerene,  of  Ohio. 

Lee  F.  Warner,  Clerk ;  G.  B.  Spaulding  and  R.  ].  McNeil,  As- 
sistant Clerks. 


APPENDIX  N. 

REGULATION  OF  INJUNCTIONS;  WITH  HISTORY 
OF  AND  REMARKS  UPON  EXISTING  LAW  AND 
PRACTICE.1 

[Extracts  from  House  Report  No.  612,  Sixty-second  Congress,  second 
session,  April  26,  1912,  submitted  by  Mr.  Clayton;  contained  in  Senate 
Report  No.  698,  (Committee  on  the  Judiciary),  Sixty-third  Congress,  sec- 
ond session,  July  22,  1914,  submitted  by  Mr.  Culbertson,  pages  18  to  23, 
inclusive.] 

***** 

The  too  ready  issuance  of  injunctions  or  the  issuance  without 
proper  precautions  or  safeguards  has  been  called  to  the  attention 
of  the  Congress  session  after  session  for  many  years.  The  bill 
now  reported  [House  Committee's  draft  of  Clayton  Bill]  seeks 
to  remedy  the  evils  complained  of  by  legislation  directed  to  those 
specific  matters  which  have  given  rise  to  most  criticism.  These 
matters  are  so  segregated  in  various  sections  of  the  bill  that  they 
may  be  separately  discussed. 

I. 

[NOTICE.] 

***** 

FORMER  STATUTES. 

In  order  to  fully  understand  the  subject  of  notice  in  injunc- 
tion cases  it  is  necessary  to  give  an  historical  resume  of  the  sub- 
ject. In  the  judiciary  act  of  1789  which  was  passed  during  the 
first  session  of  that  year,  Congress  having  created  the  different 
courts  according  to  the  scheme  outlined  by  Chief  Justice  Ells- 
worth, conferred  upon  the  courts  power  to  issue  all  writs,  includ- 
ing writs  of  ne  exeat  (a  form  of  injunction),  according  to  legal 
usages  and  practice.  In  1793,  however,  there  was  a  revision  of 
that  statute,  and  among  other  things  the  same  powers,  substan- 
tially, were  conferred  upon  the  judges  as  before;  but  at  the 

I  These  extracts  present  only  such  portions  of  the  report  as  relate  to  the 
general  subject  of  injunctive  relief.  For  the  able  discussion  of  the  right 
to  injunctive  relief  in  labor  disputes  appearing  at  pages  25-35  and  51 
thereof,  and  for  discussions  of  other  special  phases,  reference  must  be  had 
to  the  report. 

335 


336  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

end  of  the  section  authorizing  the  issuance  of  injunctions,  was 
this  language:  "No  injunction  shall  be  issued  in  any  case  with- 
out reasonable  previous  notice  to  the  adverse  party  or  his  at- 
torney." 

The  law  stood  thus  until  the  general  revision  of  1873,  during 
which  period  the  law  expressly  required  reasonable  notice  to  be 
given  in  all  cases.  But  the  will  of  Congress  as  thus  expressed 
was  completely  thwarted  and  the  statute  nullified  by  the  peculiar 
construction  placed  upon  it  by  the  courts.  The  question  fre- 
quently arose.  The  courts  got  around  it  in  various  ways,  but 
usually  by  holding  that  it  did  not  apply  to  a  case  of  threatened 
irreparable  injury,  notwithstanding  that  its  language  was  broad 
and  sweeping,  plainly  covering  all  cases.  Another  form  of  ex- 
pression often  used  is  found  in  Ex  parte  Poultney  (4  Peters  C. 
C.  C.,  472)  : 

Every  court  of  equity  possesses  the  power  to  mold  its  rules  in  relation 
to  the  time  of  appearing  and  answering  so  as  to  prevent  the  rule  from 
working  injustice,  and  it  is  not  only  in  the  power  of  the  court,  but  it  is 
its  duty  to  exercise  a  sound  discretion  upon  this  subject. 

The  court  found  a  similar  method  of  evading  the  sweeping 
prohibition  of  the  revision  of  1793,  with  respect  to  notice  in 
Lawrence  v.  Bowman  (i  U.  S.  C.  C.,  Alester,  230). 

But  the  earliest  provision  requiring  notice  came  before  the 
Supreme  Court  in  1799,  in  New  York  v.  Connecticut  (4  Dall., 
i).  Its  constitutionality  was  not  questioned.  The  only  issue 
was  as  to  the  sufficiency  of  the  notice,  Chief  Justice  Ellsworth, 
for  the  court,  saying:  "The  prohibition  contained  in  the  statute 
that  writs  of  injunction  shall  not  be  granted  without  reasonable 
notice  to  the  adverse  party  or  his  attorney,  extends  to  injunc- 
tions granted  by  the  Supreme  Court  or  the  circuit  court  as  well 
as  to  those  that  may  be  granted  by  a  single  judge.  The  design 
and  effect,  however,  of  injunctions  must  render  a  shorter  notice, 
reasonable  notice,  in  the  case  of  an  application  to  a  court  than 
would  be  so  construed  in  most  cases  of  an  application  to  a  single 
judge,  and  until  a  general  rule  shall  be  settled  the  particular  cir- 
cumstances of  each  case  must  also  be  regarded." 

Here  was  a  case  in  which,  although  no  point  was  made  by 
counsel  on  any  question  of  constitutionality,  the  Supreme  Court 
accepted  the  comprehensive  requirement  of  the  act  of  1793  as 
binding  on  all  the  Federal  courts. 


APPENDIX  N.  337 

Now  we  come  to  the  present  law,  found  in  section  263  [re- 
pealed  by  Section  17  of  Clayton  Law]  of  the  Judicial  Code,  and 
reading  thus : 

Whenever  notice  is  given  of  a  motion  for  an  injunction  out  of  a  dis- 
trict court,  the  court  or  judge  thereof  may,  if  there  appears  to  be  danger 
of  irreparable  injury  from  delay,  grant  an  order  restraining  the  act  sought 
to  be  enjoined  until  the  decision  upon  the  motion;  and  such  order  may  be 
granted  with  or  without  security,  in  the  discretion  of  the  court  or  judge. 

This  was  the  law  as  contained  in  section  718  of  the  Revised 
Statutes,  said  section  having  been  enacted  in  1872.  It  simply 
embodies  the  practice  of  the  courts  with  respect  to  notice,  a 
practice  established  notwithstanding  the  nonconformity  of  the 
practice  to  the  positive  requirement  of  the  act  of  1793. 

PROPOSED  CHANGES. 

But  it  will  be  seen  that  the  giving  of  notice  and  requiring  se- 
curity, left  by  the  present  law  to  the  discretion  of  the  court,  is 
by  this  bill  a  positive  duty,  except  where  irreparable  and  im- 
mediate injury  might  result  from  the  giving  of  a  notice  or  the 
delay  incident  thereto,  in  which  case  the  court  or  judge  may  issue 
a  temporary  restraining  order  pending  the  giving  of  the  notice. 
The  concluding  part  of  the  amended  section  [Section  263  of  the 
Judicial  Code:  repealed  by  Section  17  of  Clayton  Law]  has  an 
effect  to  safeguard  parties  from  the  reckless  and  inconsiderate 
issuance  of  restraining  orders.  Injuries  compensable  in  dam- 
ages recoverable  in  an  action  at  law  are  not  treated  or  considered 
by  the  courts  as  irreparable  in  any  proper  legal  sense,  and  parties 
attempting  to  show  why  the  injury  sought  to  be  restrained  is  ir- 
reparable would  often  disclose  an  adequate  legal  remedy.  This 
provision  requires  the  reason  to  appear  in  the  order,  but  it  should 
be  read  in  connection  with  the  new  section  266b,  [See  Section 
19  of  Clayton  Law]  requiring  the  order  to  be  made  by  the  court 
or  judge  to  be  likewise  specific  in  other  essentials,  and  section 
266c,  [See  Section  20  of  Clayton  Law]  requiring  that  every  com- 
plaint filed  for  the  purpose  of  obtaining  the  order,  in  the  cases 
there  specified,  shall  contain  a  particular  description  of  the  prop- 
erty or  property  right  for  which  the  prohibitive  power  of  the 
court  is  sought,  and  that  such  complaint  shall  be  verified. 

A  valuable  provision  of  the  amendment  is  one  that  a  restraining 
order  issued  without  notice  "shall  by  its  terms  expire  within 
22 


338  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

such  time  after  entry,  not  to  exceed  seven  days,  [ten  days, — see 
Section  17  of  Clayton  Law]  as  the  court  or  judge  may  fix,  unless 
within  the  time  so  fixed  the  order  is  extended  or  renewed  for  a 
like  period,  after  notice  to  those  previously  served,  if  any,  and 
for  good  cause  shown,  and  the  reasons  for  such  extension  shall 
be  entered  of  record." 

A  legislative  precedent  for  such  legislation  is  found  in  the 
act  of  1807,  wherein  it  was  provided  that  injunctions  granted 
by  the  district  courts  "shall  not,  unless  so  ordered  by  the  circuit 
court,  continue  longer  than  to  the  circuit  court  next  ensuing,  nor 
shall  an  injunction  be  issued  by  a  district  judge  in  any  case  where 
a  party  has  had  a  reasonable  time  to  apply  to  the  circuit  for  the 
writ."  (U.  S.  Stat.  L.,  vol.  2,  p.  418.) 

If  the  views  of  President  Taft  on  this  subject  have  not 
changed,  [it  should  be  noted  that  this  report  was  submitted  April 
26,  1912,]  he  will  welcome  an  opportunity  to  approve  a  bill  con- 
taining such  provisions  as  those  in  the  amendment  governing 
notice,  because  in  his  message  of  December  7,  1909,  to  the  reg- 
ular session  of  the  Sixty-first  Congress,  after  a  quotation  from 
the  Republican  platform  of  1908,  he  said: 

I  recommend  that  in  compliance  with  the  promise  thus  made  appro- 
priate legislation  be  adopted.  The  ends  of  justice  will  best  be  met  and 
the  chief  cause  of  complaint  against  ill-considered  injunctions  without  no- 
tice will  be  removed  by  the  enactment  of  a  statute  forbidding  hereafter 
the  issuing  of  any  injunction  or  restraining  order,  whether  temporary  or 
permanent,  by  any  Federal  court  without  previous  notice  and  a  reason- 
able opportunity  to  be  heard  on  behalf  of  the  parties  to  be  enjoined;  un- 
less it  shall  appear  to  the  satisfaction  of  the  court  that  the  delay  neces- 
sary to  give  such  notice  and  hearing  would  result  in  irreparable  injury 
to  the  complainant,  and  unless,  also,  the  court  shall  from  the  evidence 
make  a  written  finding,  which  shall  be  spread  upon  the  court  minutes,  that 
immediate  and  irreparable  injury  is  likely  to  ensue  to  the  complainant, 
and  shall  define  the  injury,  state  why  it  is  irreparable,  and  shall  also  in- 
dorse on  the  order  issued  the  date  and  the  hour  of  the  issuance  of  the 
order.  Moreover,  every  such  injunction  or  restraining  order  issued  with- 
out previous  notice  and  opportunity  by  the  defendant  to  be  heard  should 
by  force  of  the  statute  expire  and  be  of  no  effect  after  seven  days  from 
the  issuance  thereof  or  within  any  time  less  than  that  period  which  the 
court  may  fix,  unless  within  such  seven  days  or  such  less  period  the  in- 
junction or  order  is  extended  or  renewed  after  previous  notice  and  op- 
portunity to  be  heard. 

My  judgment  is  that  the  passage  of  such  an  act,  which  really  embodies 
the  best  practice  in  equity  and  is  very  likely  the  rule  now  in  force  in  some 
courts,  will  prevent  the  issuing  of  ill-advised  orders  of  injunction  without 


APPENDIX  N.  339 

notice  and  will  render  such  orders,  when  issued,  much  less  objectionable 
by  the  short  time  in  which  they  may  remain  effective. 

II. 
[SECURITY.] 

Section  266a  [see  Section  18  of  Clayton  Law]  simply  requires 
security  for  costs  and  damages  in  all  ca&es,  leaving  it  no  longer 
within  the  discretion  of  the  courts  whether  any  such  security  or 
none  shall  be  given. 

Prior  to  the  said  act  of  1872  (contained  in  the  revision  of 
1873)  there  appears  to  have  been  no  legislation  on  the  matter 
of  security  in  injunction  cases;  but  that  security  was  usually 
required  is  a  fact  well  known  to  the  legal  profession.  It  seems 
clearly  just  and  salutary  that  the  extraordinary  writ  of  injunc- 
tion should  not  issue  in  any  case  until  the  party  seeking  it  and 
for  whose  benefit  it  issues  has  provided  the  other  party  with  all 
the  protection  which  security  for  damages  affords. 

It  appears  by  the  authorities,  both  English  and  American,  to 
have  been  always  within  the  range  of  judicial  discretion,  in  the 
absence  of  a  statute,  to  waive  security,  though  better  practice  has 
been  to  require  security  as  a  condition  to  issuing  restraining 
orders  and  injunctions. 

The  new  section  266a,  [see  Section  18  of  Clayton  Law]  takes 
the  matter  of  requiring  security  out  of  the  category  of  discretion- 
ary matters,  where  it  was  found  by  the  Committee  on  Revision 
and  permitted  to  remain. 

For  a  discussion  of  the  existing  law  on  the  question  of  se- 
curity, we  refer  to  Russell  v.  Farley  (105  U.  S.,  433). 

III. 
[INJUNCTIVE    ORDER    MUST    BE    SPECIFIC.] 

Section  266b  [see  Section  19  of  Clayton  Law]  is  of  general 
application.  Defendants  should  never  be  left  to  guess  at  what 
they  are  forbidden  to  do,  but  the  order  "shall  describe  in  reason- 
able detail,  and  not  by  reference  to  the  bill  of  complaint  or  other 
document,  the  act  or  acts  sought  to  be  restrained."  It  also  con- 
tains a  safeguard  against  what  have  been  heretofore  known  as 
dragnet  or  blanket  injunctions,  by  which  large  numbers  may  be 
accused,  and  eventually  punished,  for  violating  injunctions  in 


34Q  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

cases  in  which  they  were  not  made  parties  in  the  legal  sense  and 
of  which  they  had  only  constructive  notice,  equivalent  in  most 
cases  to  none  at  all.  Moreover,  no  person  shall  be  bound  by  any 
such  order  without  actual  personal  notice. 

EXISTING  LAW  AND  PRACTICE. 

There  was  heretofore  no  Federal  statute  to  govern  either  the 
matter  of  making  or  form  and  contents  of  orders  for  injunctions. 
Of  course,  where  a  restraining  order  is  granted  that  performs 
the  functions  of  order,  process,  and  notice.  But  the  writ  of  in- 
junction, where  temporary,  is  preceded  by  the  entry  of  an  order, 
and  where  permanent  by  the  entry  of  a  decree. 

The  whole  matter  appears  to  have  been  left,  both  by  the  States 
and  the  Federal  Government,  to  the  courts,  which  have  mostly 
conformed  to  established  principles. 

The  most  important  of  these  was  that  the  order  should  be 
sufficiently  clear  and  certain  in  its  terms  that  the  defendants 
could  by  an  inspection  of  it  readily  know  what  they  were  for- 
bidden to  do. 

See  Arthur  v.  Oakes,  63  Fed.  Rep.,  310;  25  L.  R.  An.,  414; 
St.  Louis  Min.,  etc.,  Co.  v.  Co.  C.  Montana  Min.  Co.,  58  Fed 
Rep.,  129;  Sweet  v.  Mangham,  4  Jur.,  479;  9  L.  J.  Ch.,  323, 
34  Eng.  Ch.,  51 ;  Cother  v.  Midland  R.  Co.,  22  Eng.  Ch.,  469. 

It  should  also  be  in  accordance  with  the  terms  of  the  prayer 
of  the  bill.  (State  v.  Rush  County,  35  Kan.,  150;  McEldowney 
v.  Lowther,  49  W.  Va.,  348).  It  should  not  impose  a  greater 
restraint  than  is  asked  or  is  necessary  (Shubert  v.  Angeles,  80 
N.  Y.  App.  Div.,  625 ;  New  York  Fire  Dept.  v.  Baudet,  4  N.  Y. 
Supp.,  206),  and  should  be  specific  and  certain.  (Orris  v.  Na- 
tional Commercial  Bank,  81  N.  Y.  App.  Div.,  631 ;  St.  Rege's 
Paper  Co.  v.  Santa  Clara  Lumber  Co.,  55  N.  Y.  App.  Div.,  225 ; 
Norris  v.  Cable,  8  Rich  (S.  C.),  58;  Parker  v.  First  Ave.  Hotel 
Co.,  24  Ch.  Div.,  282;  Hackett  v.  Baiss,  L.  R.,  20  Eq.,  494; 
Dover  Harbour  v.  London,  etc.,  R.  Co.,  3  De  G.  F.  &  J.,  559; 
Low  v.  Innes,  4  De  G.  J.  &  S.,  286.) 

So  it  appears  that  section  266b  [see  Section  19  of  Clayton  Law] 
really  does  not  change  the  best  practice  with  respect  to  orders, 
but  imposes  the  duty  upon  the  courts,  in  mandatory  form,  to 
conform  to  correct  rules,  as  already  established  by  judicial  prec- 
edent. 


APPENDIX  N.  341 

That  such  provision  is  necessary  and  timely  will  appear  upon 
an  inspection  of  some  orders  which  have  issued. 

For  instance,  take  the  case  of  Kansas  &  Texas  Coal  Co.  v. 
Dcnney,  decided  in  the  district  court  for  Arkansas  in  1899. 
And  here,  as  in  most  of  such  cases,  no  full  official  report  of  the 
case  can  be  obtained,  but  a  mere  memorandum.  In  this  case 
the  defendants  (strikers)  were  ordered  to  be  and  were  enjoined 
from  "congregating  at  or  near  or  on  the  premises  of  the  prop- 
erty of  the  Kansas  &  Texas  Coal  Co.  in,  about,  or  near  the  town 
of  Huntington,  Ark.,  or  elsewhere,  for  the  purpose  of  intimi- 
dating its  employees  or  preventing  said  employees  from  render- 
ing service  to  the  Kansas  &  Texas  Coal  Co.  from  inducing  or 
coercing  by  threats,  intimidation,  force,  or  violence  any  of  said 
employees  to  leave  the  employment  of  the  said  Kansas  &  Texas 
Coal  Co.,  or  from  in  any  manner  interfering  with  or  molesting 
any  person  or  persons  who  may  be  employed  or  seek  employ- 
ment by  and  of  the  Kansas  &  Texas  Coal  Co.  in  the  operation  of 
its  coal  mines  at  or  near  said  town  of  Huntington,  or  elsewhere." 

It  will  be  observed  that  a  defendant  in  that  suit  would  render 
himself  liable  to  punishment  for  contempt  if  he  met  a  man  seek- 
ing employment  by  the  company  in  a  foreign  country  and  per- 
suaded him  not  to  enter  its  service. 

The  bill  further  provides  that  it  shall  be  "binding  only  upon 
parties  to  the  suit,  their  agents,  servants,  employees,  and  at- 
torneys, or  those  in  active  concert  with  them,  and  who  shall 
by  personal  service  or  otherwise  have  received  actual  notice  of 
the  same."  Unquestionably  this  is  the  true  rule,  but  unfortunate- 
ly the  courts  have  not  uniformly  observed  it.  Much  of  the  criti- 
cism which  arose  from  the  Debs  case  (64  Fed.  Rep.,  724)  was 
due  to  the  fact  that  the  court  undertook  to  make  the  order  effec- 
tive not  only  upon  the  parties  to  the  suit  and  those  in  concert 
with  them,  but  upon  all  other  persons  whomsoever.  In  Scott  v. 
Donald  (165  U.  S.,  117),  the  court  rebuked  a  violation  by  the 
lower  court  in  the  following  language : 

The  decree  is  also  objectionable  because  it  enjoins  persons  not  parties 
to  the  suit.  This  is  not  a  case  where  the  defendants  named  represent 
those  not  named.  Nor  is  there  alleged  any  conspiracy  between  the  parties 
defendant  and  other  unknown  parties.  The  acts  complained  of  are  tor- 
tious  and  do  not  grow  out  of  any  common  action  or  agreement  between 
constables  and  sheriffs  of  the  State  of  South  Carolina.  We  have  indeed  a 
right  to  presume  that  such  officers,  though  not  named  in  this  suit,  will, 


342  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

when  advised  that  certain  provisions  of  the  act  in  question  have  been  pro- 
nounced unconstitutional  by  the  court  to  which  the  Constitution  of  the 
United  States  refers  such  questions,  voluntarily  refrain  from  enforcing 
such  provisions ;  but  we  do  not  think  it  comports  with  well-settled  princi- 
ples of  equity  procedure  to  include  them  in  an  injunction  in  a  suit  in 
which  they  were  not  heard  or  represented  or  to  subject  them  to  penalties 
for  contempt  in  disregarding  such  an  injunction.  (Fellows  v.  Fellows,  4 
John.  Chan.  25,  citing  Iveson  v.  Harris,  7  Ves.  257.) 

The  decree  of  the  court  below  should  therefore  be  amended  by  being 
restricted  to  the  parties  named  as  plaintiff  and  defendants  in  the  bill,  and 
this  is  directed  to  be  done,  and  it  is  otherwise. 

IV. 

[PRACTICE   IN   RELATION   TO   INJUNCTIVE   RELIEF   IN 
TRADES  DISPUTES.]^ 

Section  2660  [see  Section  20  of  Clayton  Law]  is  concerned 
with  cases  between  "employer  and  employees,  or  between  em- 
ployers and  employees,  or  between  employees,  or  between  per- 
sons employed  and  persons  seeking  employment,  involving  or 
growing  out  of  a  dispute  concerning  terms  or  conditions  of  em- 
ployment." 

The  first  clause  of  the  new  section  266c  relates  to  the  con- 
tents and  form  of  the  complaint.  It  must  disclose  a  threatened 
irreparable  injury  to  property  or  to  a  property  right  of  the  party 
making  the  application  for  which  there  is  no  adequate  remedy  at 
law.  And  the  property  or  property  right  must  be  described 
"with  particularity." 

These  requirements  are  merely  those  of  good  pleading  and 
correct  practice  in  such  cases  established  by  a  long  line  of  prec- 
edents, well  understood  by  the  profession  and  which  should  be 
but  perhaps  have  not  been  uniformly  applied.  To  show  this  it  is 
only  necessary  to  briefly  state  the  applicable  rules,  citing  some 
of  the  numerous  authorities. 

As  the  granting  of  an  injunction  rests  in  some  degree  in  the 
discretion  of  the  chancellor,  allegations  in  the  complaint  should 
show  candor  and  frankness.  (Moffatt  v.  Calvert  County  Com- 
m'rs,  97  Md.,  266;  Johnston  v.  Glenn,  40  Md.,  200;  Edison 
Storage  Battery  Co.  v.  Edison  Automobile  Co.,  67  N.  J.  Eq.,  44 ; 
Sharp  v.  Ashton,  3  Ves.  &  B.,  144.) 

i  This  portion  of  the  report  is  broader  than  the  sub-title  indicates.  It 
will  be  found  to  contain  a  statement  of  matters  of  general  application  in 
suits  for  injunctive  relief. 


APPENDIX  N.  343 

The  omission  of  material  facts  which,  in  the  nature  of  the 
case,  must  be  known  to  the  plaintiff  will  preclude  the  granting 
of  the  relief.  (Sprigg  v.  Western  Tel.  Co.,  46  Md.,  67;  Walker 
v.  Burks,  48  Tex.,  206.) 

An  injunction  may  be  refused  if  the  allegations  are  argumen- 
tative and  inferential.  (Battle  v.  Stevens,  32  Ga.,  25;  Warsop 
v.  Hastings,  22  Minn.,  437.) 

The  allegations  of  the  complaint  must  be  definite  and  certain. 
(St.  Louis  v.  Knapp  Co.,  104  U.  S.,  658.) 

The  complaint  must  set  forth  the  facts  with  particularity  and 
minuteness  (Minor  v.  Terry,  Code  Rep.  N.  S.  (N.  S.),  384), 
and  no  material  fact  should  be  left  to  inference.  (Warsop  v. 
Hastings,  22  Minn.,  437;  Philphower  v.  Todd,  II  N.  J.  Eq.,  54; 
Perkins  v.  Collins,  3  N.  J.  Eq.,  482.) 

Facts,  and  not  the  conclusions  or  opinions  of  the  pleader,  must 
be  stated.  (McBride  v.  Ross  (D.  C.),  13  App.  Cas.,  576.) 

An  injunction  should  not  ordinarily  be  granted  when  the  ma- 
terial allegations  are  made  upon  information  and  belief.  (Brooks 
v.  O'Hara,  8  Fed.  Rep.,  529;  In  re  Holmes,  3  Fed.  Rep.  Cases 
No.  i,  562.) 

The  complaint  must  clearly  show  the  threats  or  acts  of  defend- 
ant which  cause  him  to  apprehend  future  injury.  (Mendelsohn 
v.  McCabe,  144  Cal.,  230;  Ryan  v.  Fulghurn,  96  Ga.,  234).  And 
it  is  not  sufficient  to  allege  that  the  defendant  claims  the  right 
to  do  an  act  which  plaintiff  believes  illegal  and  injurious  to  him, 
since  the  intention  to  exercise  the  right  must  be  alleged.  (Lut- 
man  v.  Lake  Shore,  etc.,  R.  Co.,  56  Ohio  St.,  433;  Attorney 
General  v.  Eau  Claire,  37  Wis.,  400.) 

The  bill  must  allege  facts  which  clearly  show  that  the  plain- 
tiff will  sustain  substantial  injury  because  of  the  acts  complained 
of.  (Home  Electric  Light,  etc.,  Co.  v.  Gobe  Tissue  Paper  Co., 
146  Ind.,  673;  Boston,  etc.,  Ry.  Co.  v.  Sullivan,  177  Mass.,  230; 
McGovern  v.  Loder  (N.  J.  Ch.,  1890),  20  Atl.  Rep.,  209;  Smith 
v.  Lockwood,  13  Barb.,  209;  Jones  v.  Stewart  (Tenn.  Ch.  App., 
1900),  6 1  Sev.,  105;  Spokane  St.  R.  Co.  v.  Spokane,  5  Wash., 
634 ;  State  v.  Eau  Claire,  40  Wis.,  533.  And  it  is  not  sufficient 
to  merely  allege  injury  without  stating  the  facts.  Giffing  v. 
Gibb,  2  Black,  519;  Spooner  v.  McConnell,  22  Fed.  Cases  No. 
13245;  Bowling  v.  Crook,  104  Ala.,  130;  Grant  v.  Cooke,  7  D. 
C.,  165;  Coast  Line  R.  Co.  v.  Caben,  50  Ga.,  451;  Dinwiddie  v. 


344  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

Roberts,  I  Greene,  363;  Wabaska  Electric  Co.  v.  Wymore  Co., 
Nebr.,  199;  Lubrs  v.  Sturtevant,  10  Or.,  170;  Farland  v.  Wood, 
35  W.  Va.f  458.) 

Since  the  jurisdiction  in  equity  depends  on  the  lack  of  an 
adequate  remedy  at  law,  a  bill  for  an  injunction  must  state  facts 
from  which  the  court  can  determine  that  the  remedy  at  law  is  in- 
adequate. (Pollock  v.  Farmers'  Loan  &  Tr.  Co.,  157  U.  S.,  429; 
Safe-Deposit,  etc.,  Co.  v.  Anniston,  96  Fed.  Rep.,  661.) 

If  the  inadequacy  of  the  legal  remedy  depends  upon  the  de- 
fendant's insolvency  the  fact  of  insolvency  must  be  positively 
alleged.  (Fullington  v.  Kyle  Lumber  Co.,  139  Ala.,  242;  Gra- 
ham v.  Tankersley,  15  Ala.,  634.) 

An  injunction  will  not  be  granted  unless  the  complaint  shows 
that  a  refusal  to  grant  the  writ  will  work  irreparable  injury. 
(California  Nav.  Co.  v.  Union  Transp.  Co.,  122  Cal.,  641 ;  Cook 
County  Brick  Co.,  92  111.  App.,  526;  Manufacturers'  Gas  Co.  v. 
Indiana  Nat.  Gas,  etc.,  Co.,  156  Ind.,  679.)  And  it  is  not  suf- 
ficient simply  to  allege  that  the  injury  will  be  irreparable,  but  the 
facts  must  be  stated  so  that  the  court  may  see  that  the  appre- 
hension of  irreparable  injury  is  well  founded.  (California  Nav. 
Co.  v.  Union  Transp.  Co.,  122  Cal.,  641 ;  Empire  Transp.  Co.  v. 
Johnson,  76  Conn.,  79;  Orange  City  v.  Thayer,  45  Fla.,  502.) 

The  plaintiff  must  allege  that  he  has  done  or  is  willing  to  do 
everything  which  is  necessary  to  entitle  him  to  the  relief  sought. 
(Stanley  v.  Gadsley,  10  Pet.  (U.  S.),  521 ;  Elliott  v.  Sihley,  101 
Ala.,  344;  Burham  v.  San  Francisco  Fuse  Mfg.  Co.,  76  Cal. 
26;  Sloan  v.  Coolbaugh,  10  Iowa,  31;  Lewis  v.  Wilson,  17  N. 

Y.  Supp.,  128;   Spann  v.  Sterns,  18  Tex.,  556.) 

***** 

It  may  be  proper  to  notice,  in  passing,  that  the  State  courts 
furnish  precedents  frequently  for  action  by  the  Federal  courts, 
and  vice  versa,  so  that  a  pernicious  rule  or  an  error  in  one  juris- 
diction is  quickly  adopted  by  the  other.  It  is  not  contended  that 
either  the  Federal  or  the  State  courts  have  stood  alone  in  any 
of  the  precedents  which  are  disapproved. 


APPENDIX  O. 
AN  ACT  TO  REGULATE  COMMERCE.1 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of 
the  United  States  of  America  in  Congress  assembled, 

COMMON  CARRIERS  SUBJECT  TO  ACT. 

SEC.  i.  That  the  provisions  of  this  act  shall  apply  to  any  com* 
mon  carrier  or  carriers  engaged  in  the  transportation  of  passen- 
gers or  property  wholly  by  railroad,  or  partly  by  railroad  and 
partly  by  water  when  both  are  used,  under  a  common  control, 
management,  or  arrangement,  for  a  continuous  carriage  or  ship- 
ment, from  one  State  or  Territory  of  the  United  States,  or  the 
District  of  Columbia,  to  any  other  State  or  Territory  of  the 
United  States,  or  the  District  of  Columbia,  or  from  any  place  in 
the  United  States  to  an  adjacent  foreign  country,  or  from  any 
place  in  the  United  States  through  a  foreign  country  to  any  other 
place  in  the  United  States,  and  also  to  the  transportation  in  like 
manner  of  property  shipped  from  any  place  in  the  United  States 
to  a  foreign  country  and  carried  from  such  place  to  a  port  of 
transshipment,  or  shipped  from  a  foreign  country  to  any  place  in 
the  United  States  and  carried  to  such  place  from  a  port  of  entry 
either  in  the  United  States  or  an  adjacent  foreign  country:  Pro- 
vided, however,  That  the  provisions  of  this  act  shall  not  apply  to 
the  transportation  of  passengers  or  property,  or  to  the  receiving, 
delivering,  storage,  or  handling  of  property,  wholly  within  one 
State,  and  not  shipped  to  or  from  a  foreign  country  from  or  to 
any  State  or  Territory  as  aforesaid. 

i  The  text  of  the  original  Interstate  Commerce  Act  of  1887  is  presented 
for  convenience  of  comparison  with  the  provisions  of  the  Federal  Trade 
Commission  Act. 

The  jurisdiction  and  powers  conferred  upon  the  Interstate  Commerce 
Commission,  as  well  as  the  procedure  established  in  connection  therewith, 
were  used  as  precedents  and  followed  in  numerous  instances  by  the 
framers  of  the  Federal  Trade  Commission  Act. 

The  various  amendments  will  be  found  in— 24  Stautes  at  Large,  379; 
25  id.,  855;  26  id.,  743;  28  id.,  643;  34  id.,  584;  34  id.,  838;  35  id.,  60; 
35  id.,  648;  36  id.,  539;  37  id.,  566;  37  id.,  701 ;  38  id.,  1196. 

345 


346  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

TERM  "RAILROAD"  DEFINED. 

The  term  "railroad"  as  used  in  this  act  shall  include  all  bridges 
and  ferries  used  or  operated  in  connection  with  any  railroad,  and 
also  all  the  road  in  use  by  any  corporation  operating  a  railroad, 
whether  owned  or  operated  under  a  contract,  agreement,  or 
lease;  and  the  term  "transportation"  shall  include  all  instru- 
mentalities of  shipment  or  carriage. 

CHARGES  SHALL  BE  REASONABLE  AND  JUST. 

All  charges  made  for  nay  service  rendered  or  to  be  rendered  in 
the  transportation  of  passengers  or  property  as  aforesaid,  or  in 
connection  therewith,  or  for  the  receiving,  delivering,  storage,  or 
handling  of  such  property,  shall  be  reasonable  and  just;  and 
every  unjust  and  unreasonable  charge  for  such  service  is  prohib- 
ited and  declared  to  be  unlawful. 

SPECIAL  RATES  AND  PRIVILEGES  PROHIBITED. 

SEC.  2.  That  if  any  common  carrier  subject  to  the  provisions 
of  this  act  shall,  directly  or  indirectly,  by  any  special  rate,  rebate, 
drawback,  or  other  device,  charge,  demand,  collect,  or  receive 
from  any  person  or  persons  a  greater  or  less  compensation  for 
any  service  rendered,  or  to  be  rendered,  in  the  transportation  of 
passengers  or  property,  subject  to  the  povisions  of  this  act,  than 
it  charges,  demands,  collects,  or  receives  from  any  other  person 
or  persons  for  doing  for  him  or  them  a  like  and  contempora- 
neous service  in  the  transportation  of  a  like  kind  of  traffic  under 
substantially  similar  circumstances  and  conditions,  such  common 
carrier  shall  be  deemed  guilty  of  unjust  discrimination,  which  is 
hereby  prohibited  and  declared  to  be  unlawful. 

PREFERENCES  ILLEGALIZED. 

SEC.  3.  That  it  shall  be  unlawful  for  any  common  carrier  sub- 
ject to  the  provisions  of  this  act  to  make  or  give  any  undue  or 
unreasonable  preference  or  advantage  to  any  particular  person, 
company,  firm,  corporation,  or  locality,  or  any  particular  descrip- 
tion of  traffic,  in  any  respect  whatsoever,  or  to  subject  any  par- 
ticular person,  company,  firm,  corporation,  or  locality,  or  any 
particular  description  of  traffic,  to  any  undue  or  unreasonable 
prejudice  or  disadvantage  in  any  respect  whatsoever. 


APPENDIX  O.  347 

INTERCHANGE  OF  TRAFFIC  PRESCRIBED. 

Every  common  carrier  subject  to  the  provisions  of  this  act 
shall,  according  to  their  respective  powers,  afford  all  reasonable, 
proper,  and  equal  facilities  for  the  interchange  of  traffic  between 
their  respective  lines,  and  for  the  receiving,  forwarding,  and  de- 
livering of  passengers  and  property  to  and  from  their  several 
lines  and  those  connecting  therewith,  and  shall  not  discriminate 
in  their  rates  and  charges  between  such  connecting  lines ;  but  this 
shall  not  be  construed  as  requiring  any  such  common  carrier  to 
give  the  use  of  its  tracks  or  terminal  facilities  to  another  carrier 
engaged  in  like  business. 

LONG  AND  SHORT  HAUL  PROVISION. 

SEC.  4.  That  it  shall  be  unlawful  for  any  common  carrier  sub- 
ject to  the  provisions  of  this  act  to  charge  or  receive  any  greater 
compensation  in  the  aggregate  for  the  transportation  of  passen- 
gers or  of  like  kind  of  property,  under  substantially  similar  cir- 
cumstances and  conditions,  for  a  shorter  than  for  a  longer  dis- 
tance over  the  same  line,  in  the  same  direction,  the  shorter  being 
included  within  the  longer  distance;  but  this  shall  not  be  con- 
strued as  authorizing  any  common  carrier  within  the  terms  of  this 
act  to  charge  and  receive  as  great  compensation  for  a  shorter  as 
for  a  longer  distance :  Provided,  however,  That  upon  application 
to  the  commission  appointed  under  the  provisions  of  this  act, 
such  common  carrier  may,  in  special  cases,  after  investigation  by 
the  commission,  be  authorized  to  charge  less  for  longer  than  for 
shorter  distances  for  the  transportation  of  passengers  or  prop- 
erty; and  the  commission  may  from  time  to  time  prescribe  the 
extent  to  which  such  designated  common  carrier  may  be  relieved 
from  the  operation  of  this  section  of  this  act. 

POOLING  AGREEMENTS  PROHIBITED. 

SEC.  5.  That  it  shall  be  unlawful  for  any  common  carrier  sub- 
ject to  the  provisions  of  this  act  to  enter  into  any  contract,  agree- 
ment, or  combination  with  any  other  common  carrier  or  carriers 
for  the  pooling  of  freights  of  different  and  competing  railroads, 
or  to  divide  between  them  the  aggregate  or  net  proceeds  of  the 
earnings  of  such  railroads,  or  any  portion  thereof;  and  in  any 
case  of  an  agreement  for  the  pooling  of  freights  as  aforesaid, 
each  day  of  its  continuance  shall  be  deemed  a  separate  offense. 


348  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

RATE  SCHEDULES  REQUIRED. 

SEC.  6.  That  every  common  carrier  subject  to  the  provisions  of 
this  act  shall  print  and  keep  for  public  inspection  schedules  show- 
ing the  rates  and  fares  and  charges  for  the  transportation  of  pas- 
sengers and  property  which  any  such  common  carrier  has  estab- 
lished and  which  are  in  force  at  the  time  upon  its  railroad,  as  de- 
fined by  the  first  section  of  this  act.  The  schedules  printed  as 
aforesaid  by  any  such  common  carrier  shall  plainly  state  the  places 
upon  its  railroad  between  which  property  and  passengers  will  be 
carried,  and  shall  contain  the  classification  of  freight  in  force 
upon  such  railroad,  and  shall  also  state  separately  the  terminal 
charges  and  any  rules  or  regulations  which  in  any  wise  change, 
affect,  or  determine  any  part  or  the  aggregate  of  such  aforesaid 
rates  and  fares  and  charges.  Such  schedules  shall  be  plainly 
printed  in  large  type,  of  at  least  the  size  of  ordinary  pica,  and 
copies  for  the  use  of  the  public  shall  be  kept  in  every  depot  or 
station  upon  any  such  railroad,  in  such  places  and  in  such  form 
that  they  can  be  conveniently  inspected. 

PROVISION  INCLUDES  TRANSPORTATION  THROUGH 
FOREIGN  TERRITORY. 

Any  common  carrier  subject  to  the  provisions  of  this  act  re- 
ceiving freight  in  the  United  States  to  be  carried  through  a  for- 
eign country  to  any  place  in  the  United  States  shall  also  in  like 
manner  print  and  keep  for  public  inspection,  at  every  depot  where 
such  freight  is  received  for  shipment,  schedules  showing  the 
through  rates  established  and  charged  by  such  common  carrier  to 
all  points  in  the  United  States  beyond  the  foreign  country  to 
which  it  accepts  freight  for  shipment;  and  any  freight  shipped 
from  the  United  States  through  a  foreign  country  into  the  United 
States,  the  through  rate  on  which  shall  not  have  been  made  pub- 
lic as  required  by  this  act,  shall,  before  it  is  admitted  into  the 
United  States  from  said  foreign  country,  be  subject  to  customs 
duties  as  if  said  freight  were  of  foreign  production ;  and  any  law 
in  conflict  with  this  section  is  hereby  repealed. 

NOTICE  OF  ADVANCE  IN  RATES. 

No  advance  shall  be  made  in  the  rates,  fares,  and  charges  which 
have  been  established  and  published  as  aforesaid  by  any  common 
carrier  in  compliance  with  the  requirements  of  this  section,  except 


APPENDIX  O.  349 

af  ten  ten  days'  public  notice,  which  shall  plainly  state  the  changes 
proposed  to  be  made  in  the  schedule  then  in  force,  and  the  time 
when  the  increased  rates,  fares,  or  charges  will  go  into  effect; 
and  the  proposed  changes  shall  be  shown  by  printing  new  sched- 
ules, or  shall  be  plainly  indicated  upon  the  schedules  in  force  at 
the  time  and  kept  for  public  inspection.  Reductions  in  such  pub- 
lished rates,  fares,  or  charges  may  be  made  without  previous  pub- 
lic notice;  but  whenever  any  such  reduction  is  made,  notice  of 
the  same  shall  immediately  be  publicly  posted  and  the  changes 
made  shall  immediately  be  made  public  by  printing  new  schedules, 
or  shall  immediately  be  plainly  indicated  upon  the  schedules  at 
the  time  in  force  and  kept  for  public  inspection. 

ALTERATIONS  OF  PUBLISHED  SCHEDULE  PROHIB- 
ITED. 

And  when  any  such  common  carrier  shall  have  established  and 
published  its  rates,  fares,  and  charges  in  compliance  with  the  pro- 
visions of  this  section,  it  shall  be  unlawful  for  such  common  car- 
rier to  charge,  demand,  collect,  or  receive  from  any  person  or 
persons  a  greater  or  less  compensation  for  the  transportation  of 
passengers  or  property,  or  for  any  services  in  connection  there- 
with, than  is  specified  in  such  published  schedule  of  rates,  fares, 
and  charges  as  may  at  the  time  be  in  force. 

SCHEDULES  TO  BE  FILED  WITH  COMMISSION. 

Every  common  carrier  subject  to  the  provisions  of  this  act  shall 
file  with  the  commission  hereinafter  provided  for  copies  of  its 
schedules  of  rates,  fares,  and  charges  which  have  been  established 
and  published  in  compliance  with  the  requirements  of  this  sec- 
tion, and  shall  promptly  notify  said  commission  of  all  changes 
made  in  the  same.  Every  such  common  carrier  shall  also  file  with 
said  commission  copies  of  all  contracts,  agreements,  or  arrange- 
ments with  other  common  carriers  in  relation  to  any  traffic  affect- 
ed by  the  provisions  of  this  act  to  which  it  may  be  a  party.  And 
in  cases  where  passengers  and  freight  pass  over  continuous  lines 
or  routes  operated  by  more  than  one  common  carrier,  and  the 
several  common  carriers  operating  such  lines  or  routes  establish 
joint  tariffs  of  rates  or  fares  or  charges  for  such  continuous  lines 
or  routes,  copies  of  such  joint  tariffs  shall  also,  in  like  manner,  be 
filed  with  said  commission.  Such  joint  rates,  fares,  and  charges 


35°  MANUAL  OF  FEDERAL,  TRADE  COMMISSION. 

on  such  continuous  lines  so  filed  as  aforesaid  shall  be  made  pub- 
lic by  such  common  carriers  when  directed  by  said  commission, 
in  so  far  as  may,  in  the  judgment  of  the  commission,  be  deemed 
practicable;  and  said  commission  shall  from  time  to  time  pre- 
scribe the  measure  of  publicity  which  shall  be  given  to  such  rates, 
fares,  and  charges,  or  to  such  part  of  them  as  it  may  deem  it 
practicable  for  such  common  carriers  to  publish,  and  the  places  in 
which  they  shall  be  published;  but  no  common  carrier  party  to 
any  such  joint  tariff  shall  be  liable  for  the  failure  of  any  other 
common  carrier  party  thereto  to  observe  and  adhere  to  the  rates, 
fares,  or  charges  thus  made  and  published. 

MEASURES  TO  COMPEL  FILING  AND  PUBLISHING. 

If  any  such  common  carrier  shall  neglect  or  refuse  to  file  or 
publish  its  schedules  or  tariffs  of  rates,  fares,  and  charges  as  pro- 
vided in  this  section,  or  any  part  of  the  same  such  common  car- 
rier shall,  in  addition  to  other  penalties  herein  prescribed,  be  sub- 
ject to  a  writ  of  mandamus,  to  be  issued  by  any  circuit  court  of 
the  United  States  in  the  judicial  district  wherein  the  principal  of- 
fice of  said  common  carrier  is  situated  or  wherein  such  offense 
may  be  committed,  and  if  such  common  carrier  be  a  foreign  cor- 
poration, in  the  judicial  circuit  wherein  such  common  carrier  ac- 
cepts traffic  and  has  an  agent  to  perform  such  service,  to  compel 
compliance  with  the  aforesaid  provisions  of  this  section;  and 
such  writ  shall  issue  in  the  name  of  the  people  of  the  United 
States,  at  the  relation  of  the  commissioners  appointed  under  the 
provisions  of  this  act;  and  failure  to  comply  with  its  requirements 
shall  be  punishable  as  and  for  a  contempt ;  and  the  said  commis- 
sioners, as  complainants,  may  also  apply,  in  any  such  circuit  court 
of  the  United  States,  for  a  writ  of  injunction  against  such  com- 
mon carrier,  to  restrain  such  common  carrier  from  receiving  or 
transporting  property  among  the  several  States  and  Territories 
of  the  United  States,  or  between  the  United  States  and  adjacent 
foreign  countries,  or  between  ports  of  transshipment  and  of  entry 
and  the  several  States  and  Territories  of  the  United  States,  as 
mentioned  in  the  first  section  of  this  act,  until  such  common  car- 
rier shall  have  complied  with  the  aforesaid  provisions  of  this  sec- 
tion of  this  act. 


APPENDIX  O.  351 

EVASIONS  ILLEGALIZED. 

SEC.  7.  That  it  shall  be  unlawful  for  any  common  carrier  sub- 
ject to  the  provisions  of  this  act  to  enter  into  any  combination, 
contract,  or  agreement,  expressed  or  implied,  to  prevent,  by 
change  of  time  schedule,  carriage  in  different  cars,  or  by  other 
means  or  devices,  the  carriage  of  freights  from  being  continuous 
from  the  place  of  shipment  to  the  place  of  destination;  and  no 
break  of  bulk,  stoppage,  or  interruption  made  by  such  common 
carrier  shall  prevent  the  carriage  of  freights  from  being  and 
being  treated  as  one  continuous  carriage  from  the  place  of  ship- 
ment to  the  place  of  destination,  unless  such  break,  stoppage,  or 
interruption  was  made  in  good  faith  for  some  necessary  purpose, 
and  without  any  intent  to  avoid  or  unnecessarily  interrupt  such 
continuous  carriage  or  to  evade  any  of  the  provisions  of  this  act. 

CIVIL  DAMAGES  FOR  VIOLATION. 

SEC.  8.  That  in  case  any  common  carrier  subject  to  the  provi- 
sions of  this  act  shall  do,  cause  to  be  done,  or  permit  to  be  done 
any  act,  matter,  or  thing  in  this  act  prohibited  or  declared  to  be 
unlawful,  or  shall  omit  to  do  any  act,  matter,  or  thing  in  this  act 
required  to  be  done,  such  common  carrier  shall  be  liable  to  the 
person  or  persons  injured  thereby  for  the  full  amount  of  dam- 
ages sustained  in  consequence  of  any  such  violation  of  the  provi- 
sions of  this  act,  together  with  a  reasonable  counsel  or  attorney's 
fee,  to  be  fixed  by  the  court  in  every  case  of  recovery,  which  at- 
torney's fee  shall  be  taxed  and  collected  as  part  of  the  costs  in 
the  case. 

CLAIMANT  MUST  ELECT  BETWEEN  SUIT  AND  COM- 
PLAINT TO  COMMISSION;  TESTIMONY  COMPELLED; 
IMMUNITY  PROVIDED. 

SEC.  9.  That  any  person  or  persons  claiming  to  be  damaged  by 
any  common  carrier  subject  to  the  provisions  of  this  act  may 
either  make  complaint  to  the  commission  as  hereinafter  provided 
for,  or  may  bring  suit  in  his  or  their  own  behalf  for  the  recovery 
of  the  damages  for  which  such  common  carrier  may  be  liable 
under  the  provisions  of  this  act,  in  any  district  or  circuit  court 
of  the  United  States  of  competent  jurisdiction;  but  such  person 
or  persons  shall  not  have  the  right  to  pursue  both  of  said  rem- 
edies, and  must  in  each  case  elect  which  one  of  the  two  methods 


352  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

of  procedure  herein  provided  for  he  or  they  will  adopt.  In  any 
such  action  brought  for  the  recovery  of  damages  the  court  before 
which  the  same  shall  be  pending  may  compel  any  director,  officer, 
receiver,  trustee,  or  agent  of  the  corporation  or  company  de- 
fendant in  such  suit  to  attend,  appear,  and  testify  in  such  case, 
and  may  compel  the  production  of  the  books  and  papers  of  such 
corporation  or  company  party  to  any  such  suit;  the  claim  that 
any  such  testimony  or  evidence  may  tend  to  criminate  the  person 
giving  such  evidence  shall  not  excuse  such  witness  from  testify- 
ing, but  such  evidence  or  testimony  shall  not  be  used  against  such 
person  on  the  trial  of  any  criminal  proceeding. 

CARRIER,  OR  OFFICER,  AGENT,  ETC.,  OF  TRANSPORTA- 
TION CORPORATION  SUBJECT  TO  PROSECUTION. 

SEC.  10.  That  any  common  carrier  subject  to  the  provisions 
of  this  act,  or,  whenever  such  common  carrier  is  a  corporation, 
any  director  or  officer  thereof,  or  any  receiver,  trustee,  lessee, 
agent,  or  person  acting  for  or  employed  by  such  corporation,  who, 
alone,  or  with  any  other  corporation,  company,  person,  or  party, 
shall  willfully  do  or  cause  to  be  done,  or  shall  willingly  suffer  or 
permit  to  be  done,  any  act,  matter,  or  thing  in  this  act  prohibited 
or  declared  to  be  unlawful,  or  who  shall  aid  or  abet  therein,  or 
shall  willfully  omit  or  fail  to  do  any  act,  matter,  or  thing  in  this 
act  required  to  be  done,  or  shall  cause  or  willingly  suffer  or  per- 
mit any  act,  matter,  or  thing  so  directed  or  required  by  this  act  to 
be  done  not  to  be  so  done,  or  shall  aid  or  abet  any  such  omission 
or  failure,  or  shall  be  guilty  of  any  infraction  of  this  act,  or  shall 
aid  or  abet  therein,  shall  be  deemed  guilty  of  a  misdemeanor,  and 
shall,  upon  conviction  thereof  in  any  district  court  of  the  United 
States  within  the  jurisdiction  of  which  such  offense  was  commit- 
ted, be  subject  to  a  fine  of  not  to  exceed  five  thousand  dollars  for 
each  offense. 

COMMISSION  CREATED  AND  ESTABLISHED* 

SEC.  ii.  That  a  commission  is  hereby  created  and  established 

2  The  commission  as  originally  organized  comprised :  Thomas  M. 
Cooley,  of  Michigan,  chairman;  William  E.  Morrison,  of  Illinois;  Aldace 
F.  Walker,  of  Vermont;  Augustus  Schoonmaker,  of  New  York;  Walter 
L.  Bragg,  of  Alabama. 

For  present  membership,  see  page  235. 


APPENDIX  O.  353 

to  be  known  as  the  Inter-State  Commerce  Commission,  which 
shall  be  composed  of  five  commissioners,  who  shall  be  appointed 
by  the  President,  by  and  with  the  advice  and  consent  of  the  Sen- 
ate. The  commissioners  first  appointed  under  this  act  shall  con- 
tinue in  office  for  the  term  of  two,  three,  four,  five,  and  six  years, 
rspectively,  from  the  first  day  of  January,  Anno  Domini  eighteen 
hundred  and  eighty-seven,  the  term  of  each  to  be  designated  by 
the  President ;  but  their  successors  shall  be  appointed  for  terms 
of  six  years,  except  that  any  person  chosen  to  fill  a  vacancy  shall 
be  appointed  only  for  the  unexpired  time  of  the  commissioner 
whom  he  shall  succeed.  Any  commissioner  may  be  removed  by 
the  President  for  inefficiency,  neglect  of  duty,  or  malfeasance  in 
office.  Not  more  than  three  of  the  commissioners  shall  be  ap- 
pointed from  the  same  political  party.  No  person  in  the  employ 
of  or  holding  any  official  relation  to  any  common  carrier  subject 
to  the  provisions  of  this  act,  or  owning  stock  or  bonds  thereof,  Or 
who  is  in  any  manner  pecuniarily  interested  therein,  shall  enter 
upon  the  duties  of  or  hold  such  office.  Said  commissioners  shall 
not  engage  in  any  other  business,  vocation,  or  employment.  No 
vacancy  in  the  commission  shall  impair  the  right  of  the  remaining 
commissioners  to  exercise  all  the  powers  of  the  commission. 

JURISDICTION  AND  POWERS. 

SEC.  12.  That  the  commission  hereby  created  shall  have  author- 
ity to  inquire  into  the  management  of  the  business  of  all  common 
carriers  subject  to  the  provisions  of  this  act,  and  shall  keep  itself 
informed  as  to  the  manner  and  method  in  which  the  same  is  con- 
ducted, and  shall  have  the  right  to  obtain  from  such  common 
carriers  full  and  complete  information  necessary  to  enable  the 
commission  to  perform  the  duties  and  carry  out  the  objects  for 
which  it  was  created ;  and  for  the  purposes  of  this  act  the  com- 
mission shall  have  power  to  require  the  attendance  and  testimony 
of  witnesses  and  the  production  of  all  books,  papers,  tariffs,  con- 
tracts, agreements,  and  documents  relating  to  any  matter  under 
investigation,  and  to  that  end  may  invoke  the  aid  of  any  court  of 
the  United  States  in  requiring  the  attendance  and  testimony  of 
witnesses  and  the  production  of  books,  papers,  and  documents 
under  the  provisions  of  this  section. 

And  any  of  the  circuit  courts  of  the  United  States  within  the 
jurisdiction  of  which  such  inquiry  is  carried  on  may,  in  case  of 
23 


354  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

contumacy  or  refusal  to  obey  a  subpoena  issued  to  any  common 
carrier  subject  to  the  provisions  of  this  act,  or  other  person,  issue 
an  order  requiring  such  common  carrier  or  other  person  to  ap- 
pear before  said  commission  (and  produce  books  and  papers  if 
so  ordered)  and  give  evidence  touching  the  matter  in  question; 
and  any  failure  to  obey  such  order  of  the  court  may  be  punished 
by  such  court  as  a  contempt  thereof.  The  claim  that  any  such 
testimony  or  evidence  may  tend  to  criminate  the  person  giving 
such  evidence  shall  not  excuse  such  witness  from  testifying; 
but  such  evidence  or  testimony  shall  not  be  used  against  such 
person  on  the  trial  of  any  criminal  proceeding. 

PROCEDURE  UPON  INVESTIGATION  OF  COMPLAINTS. 

SEC.  13.  That  any  person,  firm,  corporation,  or  association,  or 
any  mercantile,  agricultural,  or  manufacturing  society,  or  any 
body  politic  or  municipal  organization  complaining  of  anything 
done  or  omitted  to  be  done  by  any  common  carrier  subject  to  the 
provisions  of  this  act  in  contravention  of  the  provisions  thereof, 
may  apply  to  said  commission  by  petition,  which  shall  briefly  state 
the  facts ;  whereupon  a  statement  of  the  charges  thus  made  shall 
be  forwarded  by  the  commission  to  such  common  carrier,  who 
shall  be  called  upon  to  satisfy  the  complaint  or  to  answer  the 
same  in  writing  within  a  reasonable  time,  to  be  specified  by  the 
commission.  If  such  common  carrier,  within  the  time  specified, 
shall  make  reparation  for  the  injury  alleged  to  have  been  done, 
said  carrier  shall  be  relieved  of  liability  to  the  complainant  only 
for  the  particular  violation  of  law  thus  complained  of.  If  such 
carrier  shall  not  satisfy  the  complaint  within  the  time  specified, 
or  there  shall  appear  to  be  any  reasonable  ground  for  investigating 
said  complaint,  it  shall  be  the  duty  of  the  commission  to  investi- 
gate the  matters  complained  of  in  such  manner  and  by  such  means 
as  it  shall  deem  proper. 

OFFICIAL  COMPLAINTS;  PROCEEDINGS  INSTITUTED 
ON  MOTION  OF  COMMISSION. 

Said  commission  shall  in  like  manner  investigate  any  complaint 
forwarded  by  the  railroad  commissioner  or  railroad  commission 
of  any  State  or  Territory,  at  the  request  of  such  commissioner  or 
commission,  and  may  institute  any  inquiry  on  its  own  motion  in 
the  same  manner  and  to  the  same  effect  as  though  complaint  had 
been  made. 


APPENDIX  O.  355 

DIRECT  DAMAGE  NOT  REQUIRED  TO  SUSTAIN  COM- 
PLAINT. 

No  complaint  shall  at  any  time  be  dismissed  because  of  the 
absence  of  direct  damage  to  the  complainant. 

CONTENTS  OF  REPORT;  SHALL  BE  PRIMA  FACIE  EVI- 
DENCE. 

SEC.  14.  That  whenever  an  investigation  shall  be  made  by  said 
commission,  it  shall  be  its  duty  to  make  a  report  in  writing  in 
respect  thereto,  which  shall  include  the  findings  of  fact  upon 
which  the  conclusions  of  the  commission  are  based,  together  with 
its  recommendation  as  to  what  reparation,  if  any,  should  be  made 
by  the  common  carrier  to  any  party  or  parties  who  may  be  found 
to  have  been  injured ;  and  such  findings  so  made  shall  thereafter, 
in  all  judicial  proceedings,  be  deemed  prima  facie  evidence  as  to 
each  and  every  fact  found. 

ORDER  ENTERED;   COPIES  SUPPLIED. 

All  reports  of  investigations  made  by  the  commission  shall  be 
entered  of  record,  and  a  copy  thereof  shall  be  furnished  to  the 
party  who  may  have  complained,  and  to  any  common  carrier  that 
may  have  been  complained  of. 

PROCEDURE  WHERE  VIOLATION  IS  PROVEN. 

SEC.  15.  That  if  in  any  case  in  which  an  investigation  shall  be 
made  by  said  commission  it  shall  be  made  to  appear  to  the  satis- 
faction of  the  commission,  either  by  the  testimony  of  witnesses  or 
other  evidence,  that  anything  has  been  done  or  omitted  to  be  done 
in  violation  of  the  provisions  of  this  act,  or  of  any  law  cog- 
nizable by  said  commission,  by  any  common  carrier,  or  that  any 
injury  or  damage  has  been  sustained  by  the  party  or  parties  com- 
plaining, or  by  other  parties  aggrieved  in  consequence  of  any 
such  violation,  it  shall  be  the  duty  of  the  commission  to  forthwith 
cause  a  copy  of  its  report  in  respect  thereto  to  be  delivered  to  such 
common  carrier,  together  with  a  notice  to  said  common  carrier  to 
cease  and  desist  from  such  violation,  or  to  make  reparation  for 
the  injury  so  found  to  have  been  done,  or  both,  within  a  reason- 
able time,  to  be  specified  by  the  commission ;  and  if,  within  the 
time  specified,  it  shall  be  made  to  appear  to  the  commission  that 
such  common  carrier  has  ceased  from  such  violation  of  law,  and 


356  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

has  made  reparation  for  the  injury  found  to  have  been  done,  in 
compliance  with  the  report  and  notice  of  the  commission,  or  to 
the  satisfaction  of  the  party  complaining,  a  statement  to  that  ef- 
fect shall  be  entered  of  record  by  the  commission,  and  the  said 
common  carrier  shall  thereupon  be  relieved  from  further  liability 
or  penalty  for  such  particular  violation  of  law. 

ENFORCEMENT  THROUGH  EQUITY  POWERS  OF  THE 
CIRCUIT  COURTS. 

SEC.  16.  That  whenever  any  common  carrier,  as  defined  in  and 
subject  to  the  provisions  of  this  act,  shall  violate  or  refuse  or 
neglect  to  obey  any  lawful  order  or  requirement  of  the  commis- 
sion in  this  act  named,  it  shall  be  the  duty  of  the  commission,  and 
lawful  for  any  company  or  person  interested  in  such  order  or  re- 
quirement, to  apply,  in  a  summary  way,  by  petition,  to  the  circuit 
court  of  the  United  States  sitting  in  equity  in  the  judicial  dis- 
trict in  which  the  common  carrier  complained  of  has  its  principal 
office,  or  in  which  the  violation  or  disobedience  of  such  order  or 
requirement  shall  happen,  alleging  such  violation  or  disobedience, 
as  the  case  may  be ;  and  the  said  court  shall  have  power  to  hear 
and  determine  the  matter,  on  such  short  notice  to  the  common 
carrier  complained  of  as  the  court  shall  deem  reasonable;  and 
such  notice  may  be  served  on  such  common  carrier,  his  or  its 
officers,  agents,  or  servants,  in  such  manner  as  the  court  shall  di- 
rect ;  and  said  court  shall  proceed  to  hear  and  determine  the  mat- 
ter speedily  as  a  court  of  equity,  and  without  the  formal  plead- 
ings and  proceedings  applicable  to  ordinary  suits  in  equity,  but 
in  such  manner  as  to  do  justice  in  the  premises ;  and  to  this  end 
such  court  shall  have  power,  if  it  think  fit,  to  direct  and  prosecute, 
in  such  mode  and  by  such  persons  as  it  may  appoint,  all  such  in- 
quiries as  the  court  may  think  needful  to  enable  it  to  form  a  just 
judgment  in  the  matter  of  such  petition;  and  on  such  hearing 
the  report  of  said  commission  shall  be  prima  facie  evidence  of 
the  matters  therein  stated ;  and  if  it  be  made  to  appear  to  such 
court,  on  such  hearing  or  on  report  of  any  such  person  or  persons, 
that  the  lawful  order  or  requirement  of  said  commission  drawn  in 
question  has  been  violated  or  disobeyed,  it  shall  be  lawful  for 
such  court  to  issue  a  writ  of  injunction  or  other  proper  process, 
mandatory  or  otherwise,  to  restrain  such  common  carrier  from 
further  continuing  such  violation  or  disobedience  of  such  order 
or  requirement  of  said  commission,  and  enjoining  obedience  to  the 


APPENDIX  O.  357 

same;  and  in  case  of  any  disobedience  of  any  such  writ  of  in- 
junction or  other  proper  process,  mandatory  or  otherwise,  it  shall 
be  lawful  for  such  court  to  issue  writs  of  attachment,  or  any  other 
process  of  said  court  incident  or  applicable  to  writs  of  injunction  or 
other  proper  process,  mandatory  or  otherwise,  against  such  com- 
mon carrier,  and  if  a  corporation,  against  one  or  more  of  the  direc- 
tors, officers,  or  agents  of  the  same,  or  against  any  owner,  lessee, 
trustee,  receiver,  or  other  person  failing  to  obey  such  writ  of  in- 
junction or  other  proper  process,  mandatory  or  otherwise;  and 
said  court  may,  if  it  shall  think  fit,  make  an  order  directing  such 
common  carrier  or  other  person  so  disobeying  such  writ  of  injunc- 
tion or  other  proper  process,  mandatory  or  otherwise,  to  pay  such 
sum  of  money  not  exceeding  for  each  carrier  or  person  in  default 
the  sum  of  five  hundred  dollars  for  every  day  after  a  day  to  be 
named  in  the  order  that  such  carrier  or  other  person  shall  fail  to 
obey  such  injunction  or  other  proper  process,  mandatory  or  other- 
wise ;  and  such  moneys  shall  be  payable  as  the  court  shall  direct, 
either  to  the  party  complaining,  or  into  court  to  abide  the  ulti- 
mate decision  of  the  court,  or  into  the  treasury;  and  payment 
thereof  may,  without  prejudice  to  any  other  mode  of  recovering 
the  same,  be  enforced  by  attachment  or  order  in  the  nature  of  a 
writ  of  execution,  in  like  manner  as  if  the  same  had  been  recov- 
ered by  a  final  decree  in  personam  in  such  court.  When  the  sub- 
ject shall  be  of  the  value  of  two  thousand  dollars  or  more,  either 
party  to  such  proceeding  before  said  court  may  appeal  to  the  Su- 
preme Court  of  the  United  States,  under  the  same  regulations 
now  provided  by  law  in  respect  of  security  for  such  appeal ;  but 
such  appeal  shall  not  operate  to  stay  or  supersede  the  order  of 
the  court  or  the  execution  of  any  writ  or  process  thereon ;  and 
such  court  may,  in  every  such  matter,  order  the  payment  of  such 
costs  and  counsel  fees  as  shall  be  deemed  reasonable.  Whenever 
any  such  petition  shall  be  filed  or  presented  by  the  commission  it 
shall  be  the  duty  of  the  district  attorney,  under  the  direction  of 
the  Attorney-General  of  the  United  States,  to  prosecute  the  same  ; 
and  the  costs  and  expenses  of  such  prosecution  shall  be  paid  out 
of  the  appropriation  for  the  expenses  of  the  courts  of  the  United 
States.  For  the  purposes  of  this  act,  excepting  its  penal  provi- 
sions, the  circuit  courts  of  the  United  States,  shall  be  deemed  to 
be  always  in  session. 


358  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

PRACTICE  REGULATIONS. 

SEC.  17.  That  the  commission  may  conduct  its  proceedings  in 
such  manner  as  will  best  conduce  to  the  proper  dispatch  of  busi- 
ness and  to  the  ends  of  justice.  A  majority  of  the  commission 
shall  constitute  a  quorum  for  the  transaction  of  business,  but  no 
commissioner  shall  participate  in  any  hearing  or  proceeding  in 
which  he  has  any  pecuniary  interest.  Said  commission  may, 
from  time  to  time,  make  or  amend  such  general  rules  or  orders 
as  may  be  requisite  for  the  order  and  regulation  of  proceedings 
before  it,  including  forms  of  notices  and  the  service  thereof, 
which  shall  conform,  as  nearly  as  may  be,  to  those  in  use  in  the 
courts  of  the  United  States.  Any  party  may  appear  before  said 
commission  and  be  heard,  in  person  or  by  attorney.  Every  vote 
and  official  act  of  the  commission  shall  be  entered  of  record,  and 
its  proceedings  shall  be  public  upon  the  request  of  ejther  party 
interested.  Said  commission  shall  have  an  official  seal,  which 
shall  be  judicially  noticed.  Either  of  the  members  of  the  com- 
mission may  administer  oaths  and  affirmations. 

SALARIES,  OFFICERS,  ETC. 

SEC.  18.  That  each  commissioner  shall  receive  an  annual  salary 
of  seven  thousand  five  hundred  dollars,  payable  in  the  same  man- 
ner as  the  salaries  of  judges  of  the  courts  of  the  United  States. 
The  commission  shall  appoint  a  secretary,  who  shall  receive  an 
annual  salary  of  three  thousand  five  hundred  dollars,  payable  in 
like  manner.  The  commission  shall  have  authority  to  employ  and 
fix  the  compensation  of  such  other  employees  as  it  may  find  nec- 
essary to  the  proper  performance  of  its  duties,  subject  to  the  ap- 
proval of  the  Secretary  of  the  Interior. 

OFFICES;   WITNESS-FEES. 

The  commission  shall  be  furnished  by  the  Secretary  of  the  In- 
terior with  suitable  offices  and  all  necessary  office  supplies.  Wit- 
nesses summoned  before  the  commission  shall  be  paid  the  same 
fees  and  mileage  that  are  paid  witnesses  in  the  courts  of  the 
United  States. 

EXPENSES  PROVIDED  FOR. 

All  of  the  expenses  of  the  commission,  including  all  necessary 
expenses  for  transportation  incurred  by  the  commissioners,  or  by 


APPENDIX  O.  359 

their  employees  under  their  orders,  in  making  any  investigation 
in  any  other  places  than  in  the  city  of  Washington,  shall  be  al- 
lowed and  paid,  on  the  presentation  of  itemized  vouchers  there- 
for approved  by  the  chairman  of  the  commission  and  the  Secre- 
tary of  the  Interior. 

PRINCIPAL  OFFICE;  SESSIONS  ELSEWHERE. 

SEC.  19.  That  the  principal  office  of  the  commission  shall  be  in 
the  city  of  Washington,  where  its  general  sessions  shall  be  held ; 
but  whenever  the  convenience  of  the  public  or  of  the  parties  may 
be  promoted  or  delay  or  expense  prevented  thereby,  the  commis- 
sion may  hold  special  sessions  in  any  part  of  the  United  States. 
It  may,  by  one  or  more  of  the  commissioners,  prosecute  any  in- 
quiry necessary  to  its  duties,  in  any  part  of  the  United  States, 
into  any  matter  or  question  of  fact  pertaining  to  the  business  of 
any  common  carrier  subject  to  the  provisions  of  this  act. 

JF  REQUIRED,  CARRIERS  MUST  FILE  REPORTS. 

SEC.  20.  That  the  commission  is  hereby  authorized  to  require 
annual  reports  from  all  common  carriers  subject  to  the  provisions 
of  this  act,  to  fix  the  time  and  prescribe  the  manner  in  which  such 
reports  shall  be  made,  and  to  require  from  such  carriers  specific 
answers  to  all  questions  upon  which  the  commission  may  need  in- 
formation. Such  annual  reports  shall  show  in  detail  the  amount 
of  capital  stock  issued,  the  amounts  paid  therefor,  and  the  man- 
ner of  payment  for  the  same;  the  dividends  paid,  the  surplus 
fund,  if  any,  and  the  number  of  stockholders;  the  funded  and 
floating  debts  and  the  interest  paid  thereon ;  the  cost  and  value  of 
the  carrier's  property,  franchises,  and  equipment ;  the  number  of 
employees  and  the  salaries  paid  each  class;  the  amounts  ex- 
pended for  improvements  each  year,  how  expended,  and  the  char- 
acter of  such  improvements ;  the  earnings  and  receipts  from  each 
branch  of  business  and  from  all  sources ;  the  operating  and  other 
expenses ;  the  balances  of  profit  and  loss ;  and  a  complete  exhibit 
of  the  financial  operations  of  the  carrier  each  year,  including  an 
annual  balance-sheet.  Such  reports  shall  also  contain  such  in- 
formation in  relation  to  rates  or  regulations  concerning  fares  or 
freights,  or  agreements,  arrangements,  or  contracts  with  other 
common  carriers,  as  the  commission  may  require;  and  the  said 
commission  may,  within  its  discretion,  for  the  purpose  of  enabling 


360  MANUAL  OP  FEDERAL  TRADE  COMMISSION. 

it  the  better  to  carry  out  the  purposes  of  this  act,  prescribe  (if 
in  the  opinion  of  the  commission  it  is  practicable  to  prescribe  such 
uniformity  and  methods  of  keepng  accounts)  a  period  of  time 
within  which  all  common  carriers  subject  to  the  provisions  of 
this  act  shall  have,  as  near  as  may  be,  a  uniform  system  of  ac- 
counts, and  the  manner  in  which  such  accounts  shall  be  kept. 

ANNUAL  REPORT  BY  COMMISSION. 

SEC.  21.  That  the  commission  shall,  on  or  before  the  first  day 
of  December  in  each  year,  make  a  report  to  the  Secretary  of  the 
Interior,  which  shall  be  by  him  transmitted  to  Congress,  and 
copies  of  which  shall  be  distributed  as  are  the  other  reports  is- 
sued from  the  Interior  Department.  This  report  shall  contain 
such  information  and  data  collected  by  the  commission  as  may 
be  considered  of  value  in  the  determination  of  questions  connected 
with  the  regulation  of  commerce,  together  with  such  recommenda- 
tions as  to  additional  legislation  relating  thereto  as  the  commis- 
sion may  deem  necessary. 

SAVING  CLAUSES. 

SEC.  22.  That  nothing  in  this  act  shall  apply  to  the  carriage, 
storage,  or  handling  of  property  free  or  at  reduced  rates  for  the 
United  States,  State,  or  municipal  governments,  or  for  charitable 
purposes,  or  to  or  from  fairs  and  expositions  for  exhibition  there- 
at, or  the  issuance  of  mileage,  excursion,  or  commutation  passen- 
ger tickets ;  nothing  in  this  act  shall  be  construed  to  prohibit  any 
common  carrier  from  giving  reduced  rates  to  ministers  of  reli- 
gion; nothing  in  this  act  shall  be  construed  to  prevent  railroads 
from  giving  free  carriage  to  their  own  officers  and  employees,  or 
to  prevent  the  principal  officers  of  any  railroad  company  or  com- 
panies from  exchanging  passes  or  tickets  with  other  railroad  com- 
panies for  their  officers  and  employees ;  and  nothing  in  this  act 
contained  shall  in  any  way  abridge  or  alter  the  remedies  now  ex- 
isting at  common  law  or  by  statute,  but  the  provisions  of  this  act 
are  in  addition  to  such  remedies.  Provided,  That  no  pending 
litigation  shall  in  any  way  be  affected  by  this  act. 

APPROPRIATION. 

SEC.  23.  That  the  sum  of  one  hundred  thousand  dollars  is 
hereby  appropriated  for  the  use  and  purposes  of  this  act  for  the 


APPENDIX  O.  361 

fiscal  year  ending  June  thirtieth,  Anno  Domini  eighteen  hundred 
and  eighty-eight,  and  the  intervening  time  anterior  thereto. 

TIMES  WHEN  PROVISIONS  BECOME  EFFECTIVE. 

SEC.  24.  That  the  provisions  of  sections  eleven  and  eighteen  of 
this  act,  relating  to  the  appointment  and  organization  of  the  com- 
mission herein  provided  for,  shall  take  effect  immediately,  and 
the  remaining  provisions  of  this  act  shall  take  effect  sixty  days 
after  its  passage. 

Approved,  February  4,  1887. 


APPENDIX  P. 

MEMORANDA    OF    CASES    INSTITUTED    BY    THE 
UNITED  STATES  UNDER  THE  ANTI- 
TRUST LAWS. 

(Revised  to  October  15,  1915.) 

United  States  v.  JelUco  Mountain  Coal  Company.  (43  Fed.  898, 
46  Fed.  432.)  Suit  in  Circuit  Court  at  Nashville,  Term.,  Oc- 
tober 13,  1890,  against  the  members  of  the  "Nashville  Coal  Ex- 
change," composed  of  various  coal-mining  companies  operating 
mines  in  Kentucky  and  Tennessee  and  of  persons  and  firms 
dealing  in  coal  in  Nashville,  formed  for  the  purpose  of  fixing 
prices  and  regulating  the  output  of  coal.  Upon  hearing  the 
court,  on  June  4,  1891,  held  the  combination  to  be  in  violation 
of  the  Anti-trust  law  and  enjoined  the  further  carrying  out  of 
the  agreement. 

United  States  v.  Greenhut  et  al.  (50  Fed.  469.)  A  proceeding 
by  indictment  in  District  Court,  Massachusetts,  May  16,  1892, 
against  the  officers  of  the  Distilling  and  Cattle  Feeding  Co. 
(Whiskey  Trust)  for  an  alleged  violation  of  the  Anti-trust 
law.  Indictment  quashed,  as  allegations  were  held  not  to  con- 
stitute an  offense  under  the  statute. 

In  re  Corning.  (51  Fed.  205.)  Application  to  District  Court,  N. 
D.  Ohio,  June  n,  1892,  for  a  warrant  of  removal  from  Ohio 
to  Massachusetts  to  answer  to  the  indictment  found  in  the 
Greenhut  case.  Application  denied  and  prisoner  discharged. 

In  re  Terrell.  (51  Fed.  213.)  Application  to  Circuit  Court,  S. 
D.  New  York,  June  28,  1892,  for  a  writ  of  habeas  corpus  to 
secure  a  discharge  from  arrest  and  detention  upon  a  warrant 
for  removal  from  New  York  to  Massachusetts  to  answer  to  the 
indictment  found  in  the  Greenhut  case.  Petitioner  discharged. 

In  re  Greene.  (52  Fed.  104.)  Petition  to  Circuit  Court,  S.  D. 
Ohio,  August  4,  1892,  for  writ  of  habeas  corpus  to  secure  re- 
lease from  the  custody  of  the  marshal,  by  whom  he  was  held 
awaiting  an  order  for  the  removal  of  Greene  to  Massachusetts 
to  answer  to  the  indictment  in  the  Greenhut  case.  Prisoner 
discharged. 

United  States  v.  Nelson.  (52  Fed.  646,  201  U.  S.  92.)  Indict- 
ment in  District  Court,  Minnesota,  October  10,  1892,  of  a  num- 

362 


APPENDIX  P.  363 

her  of  lumber  dealers  for  conspiring  together  to  raise  the  price 
of  lumber.  Demurrer  to  indictment  sustained. 

United  States  v.  Trans-Missouri  Freight  Association.  (53  Fed. 
440,  58  Fed.  58,  1 66  U.  S.  290.)  Petition  filed  January  6, 
1892,  in  Circuit  Court  Kansas,  to  enjoin  the  operations  of  a 
combination  of  railroads  engaged  in  interstate  commerce, 
formed  for  the  purpose  of  maintaining  "uniform  rates,"  etc. 
Petition  dismissed  by  Circuit  Court;  decree  of  dismissal  af- 
firmed by  Circuit  Court  of  Appeals,  and  reversed  by  the  United 
States  Supreme  Court. 

United  States  v.  Workingmen's  Amalgamated  Council  of  New 
Orleans  et  al.  (54  Fed.  994,  57  Fed.  85.)  Suit  in  Circuit 
Court,  E.  D.  Louisiana,  March  25,  1893,  to  restrain  defendants, 
a  combination  of  workmen,  from  interfering  with  interstate 
and  foreign  commerce.  An  injunction  was  granted  and  the 
decree  was  affirmed  by  the  Circuit  Court  of  Appeals. 

United  States  v.  Patterson  et  al.  (55  Fed.  605,  59  Fed.  280.) 
Indictment  in  Circuit  Court,  Massachusetts,  February  28  and 
June  7,  1893,  of  members  of  a  combination  formed  for  the  pur- 
pose of  controlling  the  price  of  cash  registers.  Letter  of  At- 
torney-General dated  October  16,  1893,  shows  case  was  al- 
lowed to  lapse  because  of  reconciliation  of  complaining  wit- 
ness with  defendants.  (For  summary  of  proceedings  upon  re- 
newal of  prosecution,  see  page  385 ;  also  action  in  equity  enti- 
tled United  States  v.  National  Cash  Register  Co.,  page  382.) 

United  States  v.  £.  C.  Knight  Company.  (60  Fed.  306,  60  Fed. 
934,  156  U.  S.  i.)  Petition  in  Circuit  Court,  E.  D.  Pennsyl- 
vania, January  30,  1894,  to  enjoin  the  operations  of  an  alleged 
Sugar  Trust.  The  petition  was  dismissed  January  30,  1894. 
Appeal  was  taken  to  the  Circuit  Court  of  Appeals  and  the  de- 
cree affirmed.  From  this  decision  an  appeal  was  taken  to  the 
Supreme  Court  of  the  United  States,  where  the  decree  of  dis- 
missal was  again  affirmed. 

United  States  v.  Eugene  V.  Debs  et  al.  Petition  filed  on  July  3, 
1894,  in  the  U.  S.  Circuit  Court  for  the  District  of  Indiana, 
seeking  to  restrain  interference  by  American  Railway  Union 
and  forty-nine  individual  defendants  with  mails  and  interstate 
commerce  carried  by  all  railroads  operating  in  Indiana.  An 
injunction  was  issued  on  July  3,  1894,  which  was  continued  in 
force  until  September  19,  1898,  when  the  case  was  dismissed 


364  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

at  the  instance  of  the  government.  (See  this  page,  post,  for 
other  proceedings  against  same  defendant.) 

United  States  v.  Agler.  (62  Fed.  824.)  Information  filed  in 
Circuit  Court,  Indiana,  July  12,  1894,  charging  contempt  of 
court  in  disobeying  an  injunction  restraining  Agler  and  others 
from  interfering  with  interstate  commerce  and  obstructing  the 
mails.  Agler  was  a  member  of  the  American  Railway  Union, 
the  members  of  which  order  had  been  enjoined  from  interfer- 
ing with  the  carrying  of  the  mails  and  from  obstructing  inter- 
state commerce.  Information  quashed. 

United  States  v.  Elliott.  (62  Fed.  801,  64  Fed.  27.)  Suit  in  Cir- 
cuit Court,  E.  D.  Missouri,  July  6,  and  October  24,  1894,  to  re- 
strain Elliott,  Debs,  and  others,  members  of  the  American 
Railway  Union,  from  carrying  out  an  unlawful  conspiracy  to 
interfere  with  interstate  commerce  and  to  obstruct  the  carry- 
ing of  the  mails.  Preliminary  injunction  granted."  Final  de- 
cree entered  April  6,  1896,  against  two  hundred  and  ninety- 
five  defendants,  and  temporary  injunction  made  permanent. 

United  States  v.  Debs  et  al.  (64  Fed.  724.)  Petition  filed  on 
July  2,  1894,  in  the  Circuit  Court  for  the  Northern  District  of 
Illinois,  alleging  conspiracy  to  obstruct  the  mails  and  to  inter- 
fere with  interstate  commerce.  A  temporary  injunction  was 
issued  on  July  2,  1894,  for  violation  of  which  contempt  pro- 
ceedings were  instituted.  Original  petition  dismissed  on  July 
28,  1899,  at  the  instance  of  the  government. 

United  States  v.  Debs  et  al.  Proceedings  in  contempt  in  the  Cir- 
cuit Court,  N.  D.  Illinois,  December  14,  1894,  to  punish  Debs 
and  others  for  disobeying  an  injunction  restraining  them  from 
interfering  with  interstate  commerce  and  with  obstructing  the 
mails.  Defendants  found  guilty  and  punished. 

In  re  Debs,  petitioner.  (158  U.  S.  564.)  Application  to  United 
States  Supreme  Court,  July  2, 1894,  for  a  writ  of  habeas  corpus 
to  secure  a  discharge  from  imprisonment  for  disobeying  an  in- 
junction of  the  Circuit  Court  for  the  Northern  District  of  Illi- 
nois, restraining  Debs  and  others  from  conspiring  to  interfere 
with  interstate  commerce.  Petition  for  the  writ  denied. 

United  States  v.  Cassidy.  (67  Fed.  698.)  Indictment  in  District 
Court,  N.  D.  California,  April  I  and  2, 1895,  under  section  5440, 
Revised  Statutes,  for  combining  and  conspiring  to  restrain 
trade  and  commerce  between  the  States,  in  violation  of  the 
Anti-trust  law,  of  which  conspiracy  the  Pullman  strike  in  Cali- 


APPENDIX  P.  365 

fornia  was  a  result.    The  trial  resulted  in  a  disagreement  of 
the  jury  on  April  6,  1895.    A  nolle  prosequi  entered  on  July  i, 

1895-   ' 

Me  ore  v.  United  States.  (85  Fed.  465.)  Indictment  returned 
November  4,  1895,  against  the  members  of  an  association  of 
dealers  in  coal  at  Salt  Lake  City  for  entering  into  a  conspiracy, 
while  Utah  was  a  territory,  to  regulate  the  price  of  coal.  Moore 
was  tried  and  convicted  in  the  District  Court  of  Utah.  The 
Circuit  Court  of  Appeals  reversed  the  judgment  of  conviction, 
for  the  reason  that  upon  the  admission  of  Utah  as  a  State  it 
was  no  longer  a  "Territory"  within  the  meaning  of  the  Anti- 
trust act,  and  the  combination  not  being  in  restraint  of  inter- 
state commerce,  the  court  had  no  jurisdiction  of  the  offense. 

United  States  v.  Joint  Traffic  Association.  (76  Fed.  895,  89  Fed. 
1020,  171  U.  S.  505.)  Suit  instituted  January  8,  1896,  in  the 
Circuit  Court,  S.  D.  New  York,  to  enjoin  the  alleged  violation 
of  the  Anti-trust  law  by  a  combination  of  railroads.  The  Cir- 
cuit Court  dismissed  the  bill,  and  the  Court  of  Appeals  affirmed 
the  action  of  the  Circuit  Court.  These  judgments  were  re- 
versed by  the  United  States  Supreme  Court. 

United  States  v.  Addyston  Pipe  and  Steel  Company.  (78  Fed. 
712,  85  Fed.  271,  175  U.  S.  211.)  Suit  instituted  December  10, 
1896,  Circuit  Court,  E.  D.  Tennessee,  to  enjoin  the  operations 
of  a  combination  of  manufacturers  of  cast-iron  pipe,  by  which 
it  was  attempted  to  control  prices.  The  petition  was  dismissed 
by  the  Circuit  Court.  The  Circuit  Court  of  Appeals  reversed 
the  decree  of  the  Circuit  Court  and  remanded  the  case  with  in- 
structions to  enter  a  decree  for  the  government.  On  appeal  to 
the  Supreme  Court  the  action  of  the  Circuit  Court  of  Appeals 
was  affirmed. 

United  States  v.  Hopkins  et  al.  (82  Fed.  529,  84  Fed.  1018,  171 
U.  S.  578.)  Suit  instituted  in  the  Circuit  Court,  Kansas,  De- 
cember 31,  1896,  to  restrain  the  operations  of  the  "Kansas  City 
Live  Stock  Exchange,"  organized  to  control  shipments  of  live 
stock.  The  injunction  was  granted  and  an  appeal  was  taken  to 
the  Circuit  Court  of  Appeals,  from  whence  it  was  removed  to 
the  Supreme  Court  of  the  United  States.  By  that  court  the 
decree  of  the  Circuit  Court  was  reversed  and  the  case  was  re- 
manded with  instructions  to  dismiss  the  petition. 

Anderson  v.  United  States.  (82  Fed.  998,  171  U.  S.  604.)  Peti- 
tion filed  June  7,  1897,  in  the  Circuit  Court  for  the  Western 


366  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

District  of  Missouri  to  restrain  the  operations  of  "The  Traders' 
Live  Stock  Exchange,"  of  Kansas  City,  an  association  formed 
for  the  purpose  of  buying  cattle  on  the  market.  Decree  of  tem- 
porary injunction  was  granted  and  the  case  was  appealed  to  the 
Circuit  Court  of  Appeals  for  the  Eighth  Circuit.  From  there  it 
was  certified  to  the  Supreme  Court  of  the  United  States  for 
instructions.  The  Supreme  Court  reversed  the  decree  of  the 
Circuit  Court  and  remanded  the  case  with  directions  to  dismiss 
the  petition. 

United  States  v.  Coal  Dealers'  Association.  (85  Fed.  252.)  Pe- 
tition filed  December  16,  1897,  in  the  Circuit  Court,  N.  D.  Cali- 
fornia, to  restrain  the  operations  of  a  combination  of  coal  deal- 
ers. A  temporary  injunction  was  granted,  from  which  no  ap- 
peal was  taken,  and  on  May  2,  1899,  a  final  decree  was  ordered 
granting  the  relief  prayed  for. 

United  States  v.  Chesapeake  and  Ohio  Fuel  Company  et  al.  ( 105 
Fed.  93,  115  Fed.  610.)  Petition  filed  May  8,  1899,  »n  tne  Cir- 
cuit Court,  S.  D.  Ohio,  to  annul  a  contract  and  dissolve  a  com- 
bination among  and  between  producers  and  shippers  of  coal  in 
Ohio  and  West  Virginia.  Defendants  were  enjoined,  contract 
was  declared  void  and  illegal,  and  the  combination  was  dis- 
solved. 

United  States  v.  Northern  Securities  Co.  et  al.  (120  Fed.  721, 
193  U.  S.  197.)  Petition  filed  March  10,  1902,  in  the  Circuit 
Court,  Minnesota,  to  enjoin  the  defendant,  the  Northern  Se- 
curities Co.,  from  acquiring,  holding,  or  voting  the  shares  of 
the  capital  stock  of  two  competing  railway  companies.  The 
Circuit  Court  on  April  9,  1903,  entered  a  decree  in  favor  of  the 
government,  and  this  decree  was,  on  March  14,  1904,  affirmed 
by  the  Supreme  Court  of  the  United  States. 

United  States  v.  Swift  &  Co.  et  al.  (122  Fed.  529,  196  U.  S. 
375.)  Petition  filed  May  10,  1902,  in  the  Circuit  Court,  North- 
ern District  of  Illinois,  to  restrain  the  defendants,  who  were 
engaged  in  the  buying  of  live  stock  and  the  selling  of  dressed 
meats,  from  carrying  out  an  unlawful  conspiracy  entered  into 
between  themselves  and  the  various  railway  companies  to  sup- 
press competition  and  to  obtain  a  monopoly.  Demurrers  to 
the  petition  were  overruled  on  February  18,  1903,  and  a  prelim- 
inary injunction  was  granted.  The  defendants  having  failed 
to  answer,  the  court,  on  May  26,  1903,  entered  a  final  decree. 


APPENDIX  P.  367 

Defendants  appealed  from  this  decree  to  the  Supreme  Court  of 
the  United  States,  where  it  was  affirmed. 

United  States  v.  The  Federal  Salt  Company  et  al.  Petition  filed 
October  15,  1902,  in  Circuit  Court  for  the  Northern  District  of 
California  to  restrain  the  defendants  from  combining  and  con- 
spiring to  suppress  competition  in  the  manufacture  and  sale  of 
salt  in  the  Western  States.  A  temporary  restraining  order  was 
issued  on  that  date,  and  the  court  on  November  10,  1902, 
granted  an  injunction  pendente  lite,  thus  in  effect  making  the 
restraining  order  perpetual. 

United  States  v.  The  Federal  Salt  Company.  Indictment  re- 
turned on  February  28,  1903,  in  the  Northern  District  of  Cali- 
fornia, against  the  so-called  Salt  Trust.  On  May  12,  1903,  a 
plea  of  guilty  was  entered  and  a  fine  of  $1,000  was  imposed  and 
collected. 

United  States  v.  Jacksonville  Wholesale  Grocers'  Association. 
Petition  filed  September  12,  1903,  in  the  Circuit  Court  for  the 
Southern  District  of  Florida,  for  the  purpose  of  dissolving  a 
combination  of  wholesale  grocers.  November  I,  1907,  the  case 
was  dismissed. 

United  States  v.  General  Paper  Co.  et  al.  (See  U.  S.  v.  Nelson, 
and  U.  S.  v.  Alexander,  52  Fed.  646,  201  U.  S.  92,  201  U.  S. 
117.)  Petition  filed  December  27,  1904,  in  the  Circuit  Court 
for  the  District  of  Minnesota  against  the  General  Paper  Co. 
and  twenty-three  other  corporations  engaged  in  the  manufac- 
ture and  sale  of  paper,  alleging  a  combination  and  conspiracy 
to  restrain  trade  and  commerce.  On  May  U,  1906,  the  court 
ordered  judgment  in  favor  of  the  government,  dissolving  the 
combination  and  granting  all  relief  prayed  for  in  the  petition. 

United  States  v.  Armour  &  Co.  et  al.  (142  Fed.  808.)  Indict- 
ment returned  on  July  I,  1905,  in  the  Northern  District  of  Illi- 
nois. Many  preliminary  objections  were  urged,  and  all  were 
disposed  of  in  favor  of  the  government,  except  certain  special 
pleas  of  immunity,  based  upon  information  concerning  the  mat- 
ters for  which  the  defendants  were  indicted  which  they  had 
given  to  the  Department  of  Commerce  and  Labor.  On  March 
29,  1906,  the  court  sustained  the  pleas  so  far  as  the  individual 
defendants  were  concerned  and  overruled  them  with  respect  to 
the  corporations.  February  5,  1913,  dismissed. 

United  States  v.  Mac  Andrews  &  Forbes  Company  et  al.  (149 
Fed.  823;  149  Fed.  836,  212  U.  S.  585.)  Indictment  returned  in 


368  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

June,  1906,  in  the  Southern  District  of  New  York  charging  a 
combination  and  conspiracy  to  regulate  the  interstate  trade  and 
sale  in  licorice  paste.  January  10,  1907,  MacAndrews  &  Forbes 
Co.  was  found  guilty  on  first  and  third  counts  of  indictment,  the 
J.  S.  Young  Co.  was  found  guilty  on  first  and  third  counts ;  and 
a  verdict  of  acquittal  was  returned  as  to  the  individual  defend- 
ants. MacAndrews  &  Forbes  Co.  was  fined  $10,000,  and  J.  S. 
Young  Co.  $8,000. 

United  States  v.  Metropolitan  Meat  Company  et  al.  (3  Dist. 
Hawaii,  no.)  Petition  filed  in  October,  1905,  in  the  Circuit 
Court  for  Hawaii,  to  restrain  the  operation  of  alleged  unlawful 
combinations  in  restraint  of  trade  in  beef  and  beef  products. 
Demurrer  to  bill  overruled  October  2,  1906. 

United  States  v.  Nome  Retail  Grocers'  Association.  Petition  filed 
November  4,  1905,  in  the  District  Court,  Second  Division,  Dis- 
trict of  Alaska,  alleging  combination  to  fix  prices  and  to  sup- 
press competition.  With  the  consent  of  the  defendant  a  decree 
was  entered  dissolving  the  combination. 

United  States  v.  Terminal  Railroad  Association  of  St.  Louis  et  al. 
(197  Fed.  446,  224  U.  S.  383,  226  U.  S.  420,  236  U.  S.  194.) 
Petition  filed  on  December  I,  1905,  in  the  Circuit  Court  for 
the  Eastern  District  of  Missouri,  to  enjoin  the  defendant  rail- 
roads from  continuing  an  unlawful  combination  to  operate 
Eads  Bridge  and  Merchants  Bridge  as  a  common  agency  of  in- 
terstate commerce.  Upon  disagreement  of  circuit  judges  the 
case  was  carried  to  the  Supreme  Court  but  was  remanded  by 
that  court  for  further  proceedings.  The  petition  was  then 
dismissed  by  the  Circuit  Court,  and  an  appeal  was  taken  to  the 
Supreme  Court,  where,  on  April  22,  1912,  the  decree  of  the 
Circuit  Court  was  reversed,  and  the  case  remanded  with  di- 
rections to  enter  a  decree  in  conformity  with  the  opinion  of  the 
Supreme  Court.  A  controversy  having  arisen  as  to  whether 
the  district  judge  or  the  three  circuit  judges  had  jurisdiction 
a  writ  of  prohibition  was  filed  against  the  district  judge,  which 
was  sustained  by  the  Supreme  Court.  A  decree  was  thereupon 
entered  by  the  circuit  judges  from  which  the  government  again 
appealed,  but  the  decree  was  affirmed. 

United  States  v.  Allen  &  Robinson  et  al.  (3  Dist.  Hawaii,  664.) 
Petition  filed  in  October,  1905,  in  the  Circuit  Court  for  the 
District  of  Hawaii  alleging  unlawful  combination  to  control  the 
trade  in  lumber  in  that  Territory.  Answers  filed  January  2, 


APPENDIX  P.  369 

1906.     Decision  adverse  to  government  and  petition  ordered 
dismissed  on  March  30,  1911. 

United  States  v.  Otis  Elevator  Co.  et  al.  Petition  filed  March  7, 
1906,  in  the  Circuit  Court  for  the  Northern  District  of  Cali- 
fornia against  the  Otis  Elevator  Co.  and  a  number  of  other 
corporations  and  individuals,  in  which  it  was  alleged  that  they 
were  maintaining  a  combination  in  restraint  of  trade  in  the 
manufacture  and  sale  of  elevators.  On  June  I,  1906,  a  decree 
was  entered  by  consent,  granting  the  relief  prayed  for. 

United  States  v.  F.  A.  Amsden  Lumber  Company  et  al.  Indict- 
ment returned  on  May  4,  1906,  in  the  District  Court  of  Okla- 
homa for  restricting  competition  and  maintaining  prices  in  the 
sale  of  lumber.  September  25,  1907,  pleas  of  guilty  were  en- 
tered and  fines  aggregating  $2,000  were  imposed  and  collected. 

United  States  v.  National  Association  of  Retail  Druggists  et  al. 
Petition  filed  May  9,  1906,  in  the  Circuit  Court  for  the  District 
of  Indiana,  alleging  a  combination  in  restraint  of  interstate 
trade  in  the  sale  of  drugs  and  proprietary  medicines.  On  May 
9,  1907,  a  final  decree  was  entered  by  agreement,  granting  all 
the  relief  prayed  for  in  the  petition. 

United  States  v.  Virginia-Carolina  Chemical  Company  et  al.  (163 
Fed.  66.)  Indictment  returned  on  May  25,  1906,  in  the  Middle 
District  of  Tennessee,  against  thirty-one  corporations  and 
twenty-five  individuals  engaged  in  the  fertilizer  business,  charg- 
ing a  conspiracy  in  violation  of  the  Federal  Anti-trust  act  and 
a  conspiracy  to  commit  an  offense  against  the  United  States  in 
violation  of  section  5440  of  the  Revised  Statutes.  On  April  17, 
1908,  various  motions,  pleas  in  abatement,  and  demurrers  were 
filed.  On  July  3,  1908,  the  motions  and  demurrers  were  over- 
ruled, and  the  pleas  in  abatement  were  sustained  and  the  indict- 
ment was  quashed. 

United  States  v.  American  Ice  Company  et  al.  Indictment  re- 
turned on  July  12,  1906,  in  the  Supreme  Court  of  the  District 
of  Columbia,  charging  an  unlawful  agreement  to  control  prices 
and  restrict  competition  in  the  sale  of  ice.  No  further  action 
taken. 

United  States  v.  Chandler  Ice  and  Cold  Storage  Plant  et  al.  In- 
dictment returned  on  September  19,  1906,  in  the  District  Court 
for  the  Territory  of  Oklahoma,  charging  a  combination  to  ap- 
portion territory  in  the  sale  of  ice.  Demurrer  overruled  in 
May,  1907.  Case  was  ordered  dismissed  on  April  10,  1911. 
24 


370  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

United  States  v.  Alfred  M.  Gloyd  et  al.  Indictment  returned  on 
September  21,  1906,  in  the  District  Court  for  the  Territory  of 
Oklahoma,  charging  a  combination  to  maintain  prices  and  re- 
strict competition  in  the  sale  of  lumber.  Dismissed. 

United  States  v.  People's  Ice  and  Fuel  Company  and  W.  B.  Lount. 
Indictment  returned  on  October  23,  1906,  in  the  District  Court 
for  the  Territory  of  Arizona,  charging  a  combination  to  control 
prices  and  restrict  competition  in  the  sale  of  ice.  The  trial  re- 
sulted in  a  verdict  of  not  guilty  as  to  People's  Ice  and  Fuel  Co. 
Case  as  to  W.  B.  Lount  was  continued  over  term,  and  on  Oc- 
tober 16,  1907,  a  plea  in  bar  was  filed,  which  on  following  day 
was  sustained. 

United  States  v.  Demand  Lumber  Company  et  al.  Indictment 
returned  on  October  23,  1906,  in  the  District  Court  for  the 
Territory  of  Arizona,  charging  a  combination  to  control  prices 
and  restrict  competition  in  the  sale  of  lumber.  January  2,  1907, 
the  trial  was  commenced  and  resulted  in  a  verdict  of  not  guilty 
as  to  Demund  Lumber  Co.  May  9,  1907,  a  verdict  of  acquittal 
was  directed  as  to  remaining  defendants. 

United  States  v.  Phoenix  Wholesale  Meat  and  Produce  Company 
et  al.  Indictment  returned  on  October  23,  1906,  in  the  Dis- 
trict Court  for  the  Territory  of  Arizona,  charging  a  combina- 
tion to  control  prices  and  restrict  competition  in  the  sale  of 
meats.  January  7,  1907,  verdict  of  not  guilty  as  to  Phoenix 
Wholesale  Meat  &  Produce  Co.  and  indictment  against  Hurley 
dismissed.  Verdict  of  guilty  as  to  defendant  S.  J.  Tribolet, 
and  fine  of  $1,000  imposed.  Verdict  affirmed  by  Supreme 
Court  of  Territory. 

United  States  v.  Standard  Oil  Company  of  N.  J.  et  al.  (152  Fed. 
290,  173  Fed.  177,  221  U.  S.  i.)  Petition  filed  November  15, 
1906,  in  Circuit  Court  for  the  Eastern  District  of  Missouri,  al- 
leging that  defendants  were  maintaining  a  combination  in  re- 
straint of  trade  in  the  production  and  sale  of  petroleum.  Deci- 
sion in  favor  of  government  on  November  20,  1909.  Appealed 
to  Supreme  Court,  and  judgment  affirmed  May  15,  1911,  and 
the  combination  was  thereafter  dissolved  in  accordance  with 
the  terms  of  the  decree. 

United  States  v.  T.  B.  Hogg  et  al.  Indictment  returned  Decem- 
ber 8,  1906,  in  the  District  Court  for  the  Territory  of  Okla- 
homa, charging  a  combination  and  conspiracy  in  restraint  of 


APPENDIX  P.  371 

trade  and  commerce  in  the  sale  of  lumber.  Dismissed  upon 
admission  of  Oklahoma  to  statehood. 

United  States  v.  Atlantic  Investment  Company  et  aL  Indictment 
returned  February  n,  1907,  in  the  District  Court  for  the  South- 
ern District  of  Illinois,  charging  a  combination  in  restraint  of 
tarde  and  commerce  in  the  manufacture  and  sale  of  turpentine. 
February  18,  1907,  four  corporations  and  two  individuals  en- 
tered pleas  of  guilty,  and  the  court  imposed  fines  aggregating 
$30,000. 

United  States  v.  American  Seating  Company  et  al.  Indictment 
returned  March  12,  1907,  in  the  District  Court  for  the  North- 
ern District  of  Illinois,  charging  a  combination  in  restraint  of 
trade  in  the  manufacture  and  sale  of  school  and  church  furni- 
ture. April  i,  1907,  defendant  corporations  entered  pleas  of 
guilty,  with  one  exception.  May  20,  1907,  fines  aggregating 
$43,000  were  imposed  and  collected.  Defendant  E.  H.  Staf- 
ford Manufacturing  Co.  filed  demurrer  April  3,  1907.  May 
31,  1907,  demurrer  was  overruled  and  plea  of  not  guilty  en- 
tered. Dismissed  January  27,  1913. 

United  States  v.  American  Seating  Company  et  al.  Petition  filed 
March  12,  1907,  in  the  Circuit  Court  for  the  Northern  District 
of  Illinois,  alleging  a  combination  in  restraint  of  trade  in  the 
manufacture  and  sale  of  school  and  church  furniture.  August 
15,  1907,  decree  entered  granting  perpetual  injunction  against 
all  defendants,  except  E.  H.  Stafford  Manufacturing  Co.,  E.  H. 
Stafford,  E.  M.  Stafford,  and  E.  G.  Bentley.  As  to  these  de- 
fendants the  case  was  dismissed  on  January  27,  1913. 

United  States  v.  Santa  Rita  Mining  Company  and  Santa  Rita 
*Store  Company.  Indictment  returned  on  April  4,  1907,  in  the 
district  of  New  Mexico,  charging  a  combination  in  restraint  of 
trade.  Demurrer  was  filed  and  overruled.  Fine  of  $1,000  im- 
posed on  each  defendant.  An  appeal  was  taken  to  the  Supreme 
Court  of  the  Territory  of  New  Mexico,  where  judgment  of  the 
lower  court  was  reversed,  and  the  case  was  subsequently  dis- 
missed. 

United  States  v.  The  Reading  Company  et  al  (183  Fed.  427, 
226  U.  S.  324,  228  U.  S.  158.)  Petition  filed  June  12,  1907,  in 
the  Circuit  Court  for  the  Eastern  District  of  Pennsylvania,  to 
dissolve  a  combination  among  the  anthracite  coal-carrying  roads 
and  others.  December  8,  1910,  a  decision  was  handed  down 
by  the  Circuit  Court  adjudging  that  defendants  were  joined  in 


372  MANUAL  of  FEDERAL  TRADE  COMMISSION. 

a  combination  in  restraint  of  trade  through  the  instrumentality 
of  the  Temple  Iron  Co.,  but  dismissing  the  charge  of  the  peti- 
tion as  to  the  so-called  sixty-five  per  cent  contracts  whereby  it 
was  alleged  the  independent  output  was  controlled,  and  also 
the  charges  as  to  certain  so-called  minor  combinations.  Cross 
appeals  were  taken  to  the  Supreme  Court,  where  the  decree  of 
the  lower  court,  in  so  far  as  it  adjudged  the  defendants  parties 
to  a  combination  in  restraint  of  trade  through  the  instrumen- 
tality of  the  Temple  Iron  Co.,  was  affirmed,  but  was  reversed  as 
to  the  so-called  sixty-five  per  cent  contracts  with  instructions 
to  cancel  them,  and  was  further  modified  by  dismissing  the  pe- 
tition in  other  respects  without  prejudice,  instead  of  absolutely. 
(See  further  proceedings  against  the  Reading  Company,  page 

392.) 

United  States  v.  National  Umbrella  Frame  Company  et  al.  In- 
dictment returned  July  I,  1907,  in  the  District  Court  for  the 
Eastern  District  of  Pennsylvania,  charging  a  conspiracy  to  re- 
strain interstate  trade  and  commerce  in  the  manufacture  and 
sale  of  umbrella  material.  Pleas  of  guilty  were  entered  and 
fines  aggregating  $3,000  imposed  and  collected. 

United  States  v.  American  Tobacco  Company  et  al.  (164  Fed. 
700,  221  U.  S.  106,  191  Fed.  371.)  Petition  filed  July  10,  1907, 
in  the  Circuit  Court  for  the  Southern  District  of  New  York, 
in  which  it  was  alleged  that  defendants  were  maintaining  a 
combination  in  restraint  of  trade  and  commerce  in  the  manufac- 
ture and  sale  of  tobacco.  November  7,  1908,  a  decision  was 
rendered  in  favor  of  the  government,  except  as  to  individual 
defendants  and  certain  foreign  and  other  corporations.  Cross 
appeals  were  taken  to  the  Supreme  Court,  where,  on  May 
29,  1911,  a  decision  was  rendered  sustaining  the  govern- 
ment on  every  point;  and  the  case  was  remanded  to  the  Cir- 
cuit Court  and  the  unlawful  combination  was  dissolved  in  ac- 
cordance with  the  decision  of  the  Supreme  Court. 

United  States  v.  E.  H.  Stafford  Manufacturing  Company  et  al. 
Indictment  returned  July  10,  1907,  in  the  District  Court  for 
the  Northern  District  of  Illinois,  charging  a  combination  in 
restraint  of  trade  in  the  manufacture  and  sale  of  school  and 
church  furniture.  Dismissed  January  27,  1913. 

United  States  v.  £.  I.  du  Pont  de  Nemours  &  Co.  et  al.  (188 
Fed.  127.)  Petition  filed  July  30,  1907,  in  the  Circuit  Court 
for  the  District  of  Delaware,  in  which  it  is  alleged  that  defend- 


APPENDIX  P.  373 

ants  were  maintaining  a  combination  in  restraint  of  trade  in 
the  manufacture  and  sale  of  gunpowder  and  other  explosives. 
On  June  21,  1911,  a  decision  and  interlocutory  decree  was  ren- 
dered ordering  the  dissolution  of  the  combination.  Final  de- 
cree dissolving  the  combination  was  approved  by  the  court  on 
June  13,  1912. 

United  States  v.  One  Hundred  and  Seventy-five  Cases  of  Cigar- 
ettes. Information  filed  October  28,  1907,  in  the  District  Court 
for  the  Eastern  District  of  Virginia,  covering  the  seizure  of 
175  cases  of  cigarettes  under  section  6  of  the  Federal  Anti- 
trust act.  Cigarettes  subsequently  released  under  bond.  De- 
cree of  dismissal  entered  January  31,  1913. 

United  States  v.  H.  D.  Corbett  Stationery  Company  et  al.  In- 
dictment returned  November  I,  1907,  in  the  District  Court  for 
the  District  of  Arizona,  charging  a  combination  in  restraint  of 
trade.  November  4,  1907,  demurrer  filed.  November  14, 
1907,  demurrers  sustained  and  defendants  were  held  to  next 
grand  jury.  October  28,  1908,  reindicted.  November  6,  1908, 
verdict  of  not  guilty  returned. 

United  States  v.  Union  Pacific  Coal  Company  et  al.  (173  Fed. 
737.)  Indictment  returned  November  20,  1907,  in  the  District 
Court  for  the  District  of  Utah,  charging  a  conspiracy  to  main- 
tain a  monopoly  in  the  sale  of  coal.  January  6,  1908,  demurrer 
filed.  March  2,  1908,  the  demurrer  was  sustained  as  to  first 
count  and  overruled  as  to  second  count.  December  3,  1908, 
verdict  of  guilty  was  returned.  March  29,  1909,  fines  aggre- 
gating $13,000  imposed.  November,  1909,  judgment  was  re- 
versed by  Circuit  Court  of  Appeals,  and  the  suit  was  dismissed 
March  21,  1910. 

United  States  v.  Chas.  L.  Simmons  et  al.  Indictment  returned 
January  20,  1908,  in  the  District  Court  for  the  Southern  Dis- 
trict of  Alabama  charging  a  combination  in  restraint  of  trade 
and  commerce  in  the  manufacture  and  sale  of  plumbers'  sup- 
plies. December  I,  1910,  pleas  of  guilty  were  filed,  and  fines 
aggregating  $265  were  imposed. 

United  States  v.  Union  Pacific  Railroad  Company  et  al.  (188 
Fed.  102,  226  U.  S.  61,  226  U.  S.  470.)  Petition  filed  February 
I,  1908,  in  the  Circuit  Court  for  the  District  of  Utah,  charging 
a  combination  and  conspiracy  in  violation  of  the  Sherman  Act 
on  the  part  of  the  so-called  Harriman  lines.  June  23,  1911, 
the  petition  was  dismissed  by  the  Circuit  Court  on  the  ground 


374  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

that  the  roads  involved  were  not  competing  lines  and  hence  the 
combination  was  not  a  violation  of  law.  An  appeal  was  taken 
to  Supreme  Court,  which  handed  down  a  decision  reversing  the 
lower  court  on  December  2,  1912.  Final  decree  entered  at  St. 
Paul,  Minn.,  on  June  30,  1913.  This  decree  is  regarded  as  a 
model  on  the  question  of  dissolution. 
United  States  v.  E.  J.  Ray  et  al.  Indictment  returned  February 

14,  1908,  in  the  Circuit  Court  for  the  Eastern  District  of  Louis- 
iana, against  seventy-two  laborers,  charging  a  combination  and 
conspiracy  in  restraint  of  foreign  trade  and  commerce.     See 
following  case. 

United  States  v.  E.  J.  Ray  et  al.    Indictment  returned  February 

15,  1908,  in  the  Circuit  Court  for  the  Eastern  District  of  Louis- 
iana, against  seventy-two  laborers,  charging  a  combination  and 
conspiracy  in  restraint  of  interstate  trade  and  commerce.    On 
January  26,  1911,  this  and  the  preceding  case  were  consolidated 
for  trial.    A  verdict  of  guilty  was  returned  as  to  three  defend- 
ants, and  fines  aggregating  $110  were  imposed.    An  appeal  was 
granted  and  the  judgment  of  the  lower  court  was  affirmed  by 
the  Circuit  Court  of  Appeals. 

United  States  v.  Joseph  Stiefvater  et  al.  Indictment  returned 
February  15,  1908,  in  the  Circuit  Court  for  the  Eastern  District 
of  Louisiana,  charging  a  combination  in  restraint  of  trade  and 
commerce  in  the  manufacture  and  sale  of  plumbers'  supplies. 
June  25,  1910,  case  was  dismissed. 

United  States  v.  American  Naval  Stores  Company  et  al.  (172 
Fed.  455,  186  Fed.  592,  229  U.  S.  373.)  Indictment  returned 
April  n,  1908,  in  the  Circuit  Court  for  the  Southern  District 
of  Georgia,  charging  a  combination  in  restraint  of  trade  and 
commerce  in  the  manufacture  and  sale  of  turpentine.  May  10, 
1909,  verdict  of  guilty  was  returned  as  to  five  individual  defend- 
ants. Fines  aggregating  $17,500  imposed  and  two  defendants 
sentenced  to  serve  three  months  in  jail.  Appeal  taken  to  Cir- 
cuit Court  of  Appeals  and  the  judgment  was  there  affirmed. 
Certiorari  granted  by  Supreme  Court.  Judgment  of  lower 
court  reversed  June  9,  1913,  on  ground  of  error  in  judge's 
charge  to  jury.  Upon  the  retrial  defendants  were  acquitted. 

United  States  v.  New  York,  New  Haven  and  Hartford  Railroad 
Company  et  al.  Petition  filed  May  22,  1908,  in  the  Circuit 
Court  for  the  District  of  Massachusetts,  charging  the  New 
Haven  Co.  with  combining  under  common  control  the  steam 


APPENDIX  P.  375 

and  electric  railway  systems  in  New  England.  Dismissed  June 
26,  1909.  (See  action  in  equity  terminating  in  a  decree  dissolv- 
ing combination,  page  394 ;  also  United  States  v.  Mellen,  page 
388,  and  United  States  v.  William  Rockefeller  et  al.,  page  395. 

United  States  v.  John  H.  Parks  et  al.  Indictment  returned  June 
16,  1908,  in  the  Circuit  Court  for  the  Southern  District  of  New 
York,  charging  a  combination  in  restraint  of  trade  in  the  man- 
ufacture and  sale  of  paper.  On  June  19,  1908,  defendants 
plead  guilty  and  fines  aggregating  $50,000  were  imposed  and 
collected. 

United  States  v.  American  Sugar  Refining  Company  et  al.  (173 
Fed.  823,  218  U.  S.  601.)  Indictment  returned  July  i,  1909, 
in  the  Southern  District  of  New  York.  A  plea  of  the  statute 
of  limitations  was  interposed  by  the  defendants  Kissel  and 
Harned,  which  was  sustained  by  the  Circuit  Court.  An  appeal 
therefrom  was  taken  to  the  Supreme  Court,  where  the  matter 
was  decided  in  favor  of  the  government.  March  31,  1912,  the 
trial  of  this  case  resulted  in  a  disagreement  of  the  jury. 

United  States  v.  Albia  Box  &  Paper  Company  et  al.  Indictment 
returned  December  7,  1909,  in  the  Southern  District  of  New 
York  charging  combination  in  restraint  of  trade  in  paper  board. 
February  7,  1910,  all  defendants  plead  guilty  and  fines  aggre- 
gating $57,000  were  imposed  and  collected. 

United  States  v.  John  S.  Steers  et  al.  (192  Fed.  I.)  Indictment 
returned  February  17,  1910,  in  Eastern  District  of  Kentucky, 
charging  conspiracy  to  restrain  trade.  This  is  the  socalled 
"Night  Rider"  case.  April  16,  1910,  a  verdict  of  guilty  was 
returned  as  to  eight  of  twelve  defendants  and  fines  aggregating 
$3,500  were  imposed.  The  case  was  appealed  to  Circuit  Court  of 
Appeals,  and  the  judgment  was  affirmed.  May  n,  1912,  the 
sentences  were  commuted  by  the  President  to  payment  of  costs 
of  suit. 

United  States  v.  Imperial  Window  Glass  Company  et  al.  Indict- 
ment returned  April  7,  1910,  in  the  Western  District  of  Penn- 
sylvania, charging  combination  and  conspiracy  to  enhance  the 
price  of  window  glass.  Demurrers  to  the  indictment  were  over- 
ruled, and  on  November  10,  1910,  pleas  of  nolo  contendere 
were  entered  and  fines  aggregating  $10,000  were  imposed  and 
collected. 

United  States  v.  National  Packing  Company  et  al.  Indictment 
returned  March  21,  1910,  in  Northern  District  of  Illinois, 


376  MANUAL,  OF  FEDERAL  TRADE  COMMISSION. 

charging  combination  in  restraint  of  trade  in  fresh  meats.  De- 
murrer to  indictment  was  sustained  June  23,  1910. 

United  States  v.  National  Packing  Co.  et  al.  Petition  filed  March 
12,  1910,  in  the  Circuit  Court  for  the  Northern  District  of  Illi- 
nois, charging  combination  in  restraint  of  trade  in  fresh  meats 
and  praying  for  dissolution.  Dismissed  in  order  to  facilitate  the 
prosecution  of  criminal  case. 

United  States  v.  Armour  Packing  Company  et  al.  Indictment  re- 
turned in  April,  1910,  in  the  Southern  District  of  Georgia, 
charging  combination  to  control  prices  and  restrict  competition. 
Pending  on  demurrer. 

United  States  v.  Missouri  Pacific  Railroad  Company  and  twenty- 
four  other  railroads.  Petition  filed  May  31,  1910,  in  Circuit 
Court,  E.  D.  of  Missouri,  to  restrain  violation  of  Sherman 
Law,  and  temporary  restraining  order  issued  on  that  day  enjoin- 
ing advances  in  freight  rates  in  western  trunk-line  territory. 
Thereafter  the  Interstate  Commerce  Commission  enjoined  the 
rate  advances  which  the  temporary  restraining  order  had  pre- 
vented from  going  into  effect,  and  the  petition  was  dismissed. 

United  States  v.  Southern  Wholesale  Grocers'  Association.  Pe- 
tition filed  June  9,  1910,  in  the  Circuit  Court,  Northern  District 
of  Alabama,  alleging  combination  to  regulate  prices  and  control 
marketing  of  groceries.  An  agreed  decree  was  entered.  The 
court,  October  17,  1911,  perpetually  restraining  the  association, 
its  officers  and  members,  from  doing  any  and  all  of  the  acts 
complained  of.  See  contempt  proceedings,  number  79  post. 

United  States  v.  Great  Lakes  Towing  Company  et  al.  (208  Fed. 
733,  217  Fed.  657.)  Petition  filed  June  19,  1910,  in  the  Cir- 
cuit Court  Northern  District  of  Ohio,  against  an  alleged  com- 
bination of  towing  facilities  on  the  Great  Lakes.  A  decision  in 
favor  of  the  government  was  handed  down  February  n,  1913. 
Final  decree  entered  February  13,  1915,  from  which  the  gov- 
ernment appealed.  Pending  in  U.  S.  Supreme  Court  for  the 
reason  that  no  provision  was  made  for  the  dissolution  of  the 
corporation. 

United  States  v.  Chicago  Butter  &  Egg  Board.  Petition  filed 
June  13,  1910,  in  Circuit  Court,  Northern  District  of  Illinois. 
A  demurrer  to  the  petition  was  sustained  with  leave  to  amend, 
and  an  amended  petition  was  filed.  Set  for  hearing  on  master's 
report  on  January  8,  1914.  Court  held  government  to  be  enti- 


APPENDIX  P.  377 

tied  to  a  decree  as  prayed  for  in  the  petition.  Final  decree  en- 
tered October  12,  1914. 

United  States  v.  Frank  Hayne,  James  A.  Patten,  et  al.  ( 180  Fed. 
946,  187  Fed.  664,  226  U.  S.  525.)  Indictments  returned  Au- 
gust 4,  1910,  in  Southern  District  of  New  York  alleging  con- 
spiracy to  run  a  corner  in  cotton.  Demurrers  were  sutained  as 
to  certain  counts  of  indictment  and  overruled  as  to  others,  and 
an  appeal  was  taken  by  the  United  States  to  the  Supreme  Court. 
Case  was  argued  during  November,  1911,  and  reargued  at  the 
October  term,  1912.  Decision  by  Supreme  Court  January  6, 
1913,  sustaining  indictments.  Patten  entered  plea  of  guilty 
February  n,  1913,  and  was  fined  $4,000.  Indictment  dismissed 
as  to  other  defendants,  and  another  indictment  was  returned 
July  i,  1913.  (See  United  States  v.  Thompson  et  al.,  page  392.) 

United  States  v.  Standard  Sanitary  Manufacturing  Company  et 
al.  (187  Fed.  229,  187  Fed.  232,  191  Fed.  172,  226  U.  S.  20.) 
Petition  in  equity  filed  July  22,  1910,  in  Circuit  Court,  District 
of  Maryland,  charging  a  combination,  under  cover  of  a  patent 
licensing  arrangement,  to  restrain  competition  and  enhance 
prices  of  enamel  ware.  In  a  decision  rendered  October  13, 

1911,  the  court  sustained  all  the  government's  contentions,  and 
a  decree  was  entered  November  25,  1911,  from  which  an  ap- 
peal was  taken  to  the  Supreme  Court.    Decision  of  lower  court 
affirmed  by  Supreme  Court  November  18,  1913.     (See  crim- 
inal proceedings  against  the  defendants,  page  378.) 

United  States  v.  Louis  F.  Swift  et  al.  (188  Fed.  92.)  Indict- 
ment returned  in  September,  1910,  in  the  Northern  District  of 
Illinois  against  ten  individuals  engaged  in  the  meat-packing  in- 
dustry. Defendants  filed  numerous  pleas  in  bar,  etc.,  all  of 
which  were  decided  in  favor  of  the  government.  March  27, 

1912,  after  a  trial  lasting  over  three  months  the  jury  returned 
a  verdict  of  acquittal. 

United  States  v.  John  Reardon  &  Sons  Company  and  Consoli- 
dated Rendering  Co.  (191  U.  S.  454.)  Indictment  returned  in 
October,  1910,  in  the  District  of  Massachusetts,  charging  com- 
bination in  the  rendering  business.  Demurrer  to  indictment 
was  sustained  June  23,  1911. 

United  States  v.  Ferdinand  Sulzberger,  doing  business  under  the 
name  of  John  Reardon  6-  Sons  Company,  and  Horatio  W. 
Heath,  of  Boston,  doing  business  as  the  Consolidated  Render- 
dering  Company.  Indictment  returned  in  October,  1910,  in  the 


378  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

District  of  Massachusetts,  charging  a  combination  in  the  ren- 
dering business.  Demurrer  to  indictment  was  sustained  June 
23,  1911. 

United  States  v.  Horatio  W.  Heath  and  Cyrus  S.  Hapgood.  In- 
dictment returned  in  October,  1910,  in  the  District  of  Massa- 
chusetts, charging  a  combination  in  the  rendering  business.  De- 
murrer to  indictment  was  sustained  June  23,  1911. 

United  States  v.  Standard  Sanitary  Manufacturing  Company  et 
al.  In  addition  to  the  above-mentioned  suit  in  equity  (page  377, 
supra,  indictments  were  returned  at  Detroit  on  December  6, 
1910,  against  the  same  corporations  and  individuals,  charging 
the  same  acts.  After  a  trial  lasting  six  weeks  the  jury  reported 
a  disagreement  on  March  14,  1912.  Retrial  in  February,  1913, 
resulted  in  a  verdict  of  guilty  and  fines  aggregating  $51,006 
were  imposed. 

United  States  v.  American  Sugar  Refining  Company  et  at.  Peti- 
tion filed  November  28,  1910,  in  the  Circuit  Court  Southern 
District  of  New  York,  alleging  a  combination  in  restraint  of 
trade  and  praying  for  its  dissolution.  Demurrer  was  over- 
ruled December  11,  1911.  Issues  joined  and  taking  of  testi- 
mony has  been  concluded.  Set  for  hearing  in  October,  1915. 

United  States  v.  General  Electric  Company  et  al.  Petition  filed 
March  3,  1911,  in  the  Northern  District  of  Ohio,  charging  a 
combination  in  the  manufacture  of  incandescent  electric  lamps. 
A  decree  was  agreed  upon  between  counsel,  which  was  ap- 
proved by  the  court  October  12,  1911. 

United  States  v.  Purrington  et  al.  Indictment  returned  Septem- 
ber 14,  1910,  in  the  Northern  District  of  Illinois,  charging  com- 
bination to  restrain  trade  in  paving  bricks  and  paving  blocks. 
Demurrer  was  overruled  November  9,  1911.  Nolle  prosequi 
entered  June  3,  1913. 

United  States  v.  Hamburg-Amerikanische  Packetfahrt  Actien 
Gesellschaft  and  others.  (200  Fed.  806,  216  Fed.  971.)  Peti- 
tion filed  January  4,  1911,  in  the  Circuit  Court  for  the  Southern 
District  of  New  York,  to  dissolve  a  combination  of  steamship 
lines  regulating  steerage  traffic  on  the  Atlantic  Ocean.  Demur- 
rers were  overruled  December  20,  1911.  Taking  of  testimony 
completed  and  case  set  for  argument  on  April  17,  1914.  Deci- 
sion adverse  to  government  handed  down  October  13,  1914. 
Appealed  to  Supreme  Court. 


APPENDIX  P.  379 

United  States  v.  William  C.  Geer,  President,  Albia  Box  and  Paper 
Company  et  al.  Indictment  returned  April  28,  1911,  in  the 
Southern  District  of  New  York,  alleging  a  combination  and 
conspiracy  in  restraint  of  interstate  commerce  in  paper  board. 
Demurrer  overruled  May  9,  1913.  Upon  the  commencement 
of  the  trial  in  February,  1915,  defendants  withdraw  their  for- 
mer pleas  of  not  guilty  and  offered  pleas  of  nolo  contendere. 
The  court  accepted  these  pleas  and  imposed  fines  aggregating 
$16,000. 

United  States  v.  Eastern  States  Retail  Lumber  Dealers  Associa- 
tion. (201  Fed.  581, 234  U.  S.  600.)  Petition  filed  May  19, 1911, 
in  Circuit  Court  for  the  Southern  District  of  New  York,  charg- 
ing defendants  with  conspiring  to  restrain  trade  through  the  in- 
strumentality of  black  lists  and  trade  agreements.  Decision  by 
lower  court  in  favor  of  government  January  9,  1913,  and  a  de- 
cree entered  March  I,  1913,  from  which  an  appeal  was  taken 
to  the  Supreme  Court.  Decree  affirmed  June  22,  1914. 

United  States  v.  Isaac  Whiting  et  al.  Indictment  returned  May 
26,  1911,  in  the  District  of  Massachusetts,  charging  a  combina- 
tion to  restrain  trade  in  milk  throughout  the  New  England 
States.  Demurrer  argued  in  November,  1912.  March  23, 
1914,  demurrers  overruled  as  to  counts  charging  combination 
and  sustained  as  to  counts  charging  conspiracy  and  monopoly. 

United  States  v.  Isaac  Whiting  et  al.  Indictment  returned  May 
26,  1911,  in  the  District  of  Massachusetts,  charging  a  con- 
spiracy to  restrain  trade  in  milk  throughout  the  New  England 
States.  Demurrer  arguel  in  November,  1912.  March  23,  1914, 
demurrers  overruled  as  to  counts  charging  combination  and 
sustained  as  to  counts  charging  conspiracy  and  monopoly. 

United  States  v.  Holmes  et  al.  Indictment  returned  June  23, 
1911,  in  the  Northern  District  of  Illinois,  charging  that  the 
secretaries  of  fourteen  retail  lumbermen's  associations  were  in 
a  conspiracy  by  means  of  a  central  bureau  to  control  the  mar- 
keting of  lumber.  Demurrer  filed.  Nolle  prosequi  entered 
June  6,  1913. 

United  States  v.  Wm.  P.  Palmer  and  twenty-five  others,  con- 
stituting the  Bare  Copper  Wire  Assocaition.  Indictment  re- 
turned June  29,  1911,  in  the  Southern  District  of  New  York. 
Defendants  entered  pleas  of  nolo  contendere. 

United  States  v.  Wm.  P.  Palmer  and  thirty-three  others,  consti- 
tuting the  Weatherproof  and  Magnet  Wire  Association.  Indict- 


380  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

ment  returned  June  29,  1911,  in  the  Southern  District  of  New 
York.  Defendants  entered  pleas  of  nolo  contendere. 

United  States  v.  W m.  P.  Palmer  and  thirty-eight  others,  consti- 
tuting the  Rubber  Covered  Wire  Association.  Indictment  re- 
turned June  29,  1911,  in  the  Southern  District  of  New  York. 
Defendants  entered  pleas  of  nolo  contendere. 

United  States  v.  F.  W.  Roebling  and  seventeen  others,  constitut- 
ing the  Fine  Magnet  Wire  Association.  Indictment  returned 
June  29,  1911,  in  the  Southern  District  of  New  York.  De- 
fendants entered  pleas  of  nolo  contendere. 

United  States  v.  Wm.  P.  Palmer  and  fifteen  others,  constituting 
Horse  Shoe  Manufacturers'  Association.  Indictment  returned 
June  29,  1911,  in  the  Southern  District  of  New  York.  De- 
fendants entered  pleas  of  nolo  contendere. 

United  States  v.  Phillip  H.  W.  Smith  and  fourteen  others,  con- 
stituting the  Underground  Power  Cable  Association.  Indict- 
ment returned  June  29,  1911,  in  the  Southern  District  of  New 
York.  Defendants  entered  pleas  of  nolo  contendere. 

United  States  v.  Frank  N.  Philips  and  ten  others,  constituting  the 
Telephone  Cable  Association.  Indictment  returned  June  29, 
1911,  in  the  Southern  District  of  New  York.  Defendants  en- 
tered pleas  of  nolo  contendere. 

United  States  v.  Wm.  P.  Palmer  and  seventeen  others,  constitut- 
ing the  Lead  Encased  Rubber  Insulated  Cable  Association. 
Indictment  returned  June  29,  1911,  in  the  Southern  District  of 
New  York.  Defendants  entered  pleas  of  nolo  contendere. 

United  States  v.  H.  H.  Jackson,  Jr.,  and  seventeen  others,  consti- 
tuting the  Wire  Rope  Association.  Indictment  returned  June 
29,  1911,  in  the  Southern  District  of  New  York.  In  this  case 
and  the  eight  cases  immediately  preceding,  the  various  defend- 
ants entered  pleas  of  nolo  contendere,  and  fines  aggregating 
approximately  $128,700  were  assessed. 

United  States  v.  Periodical  Clearing  House  et  al.  Petition  filed 
in  June,  1911,  in  the  Southern  District  of  New  York  against 
the  members  of  the  so-called  Magazine  Trust.  The  trial  re- 
sulted in  an  equally  divided  court,  and  an  order  of  dismissal 
was  entered  May  29,  1913.  It  appearing  that  defendants  had 
abandoned  their  alleged  unlawful  practices,  no  further  action 
was  taken. 

United  States  v.  Jay  B.  Pearce  et  al.  Indictment  returned  July 
19,  1911,  in  the  Northern  District  of  Ohio  against  certain  man- 


APPENDIX  P.  381 

ufacturers  and  jobbers  for  combination  and  conspiracy  in  the 
manufacture  and  sale  of  wall  paper.  Demurrer  was  overruled 
May  13,  1912.  Trial  resulted  in  a  verdict  of  not  guilty  on 
May  24,  1912. 

United  States  v.  Lake  Shore  &  Michigan  Southern  R.  R.  et  al. 
(203  Fed.  295.)  Petition  filed  August  4,  1911,  in  the  Southern 
District  of  Ohio  to  enjoin  combination  and  conspiracy  whereby 
certain  carriers  of  bituminous  coal  are  held  under  one  control. 
Decision  of  lower  court  in  favor  of  government  December  28, 
1912.  Final  decree  entered  March  14,  1914,  but  matters  per- 
taining to  the  enforcement  thereof  are  being  taken  up  with  the 
court  from  time  to  time. 

United  States  v.  Edward  E.  Hartwick  et  al.  Petition  filed  Au- 
gust 31,  1911,  in  the  Circuit  Court,  Eastern  District  of  Michi- 
gan, alleging  conspiracy  and  unlawful  restraint  of  trade  on  the 
part  of  members  of  the  Michigan  Retail  Lumber  Dealers'  Asso- 
ciation, The  Scout  Publishing  Co.,  and  the  Lumber  Secretaries' 
Bureau  of  Information.  Issues  joined  and  taking  of  testimony 
completed.  Awaiting  decision  in  U.  S.  v.  Hollis,  page  382, 
infra. 

United  States  v.  Standard  Wood  Company  et  al.  Petition  filed  in 
September,  1911,  in  the  Circuit  Court,  Southern  District  of 
New  York,  against  the  members  of  the  so-called  Kindling 
Wood  Trust.  On  default  of  answer  a  decree  was  entered 
against  defendants  March  n,  1912. 

United  States  v.  Hunter  Milling  Company,  Blackwell  Milling  and 
Elevator  Company,  and  Frank  Foltz.  Indictment  returned 
September  10,  1911,  in  the  Western  District  of  Oklahoma, 
charging  violation  of  section  I  of  the  Anti-trust  act.  Demur- 
rer overruled  December  16,  1912.  Jury  returned  a  verdict  of 
guilty,  and  fines  aggregating  $2,000  were  imposed. 

United  States  v.  S.  W.  Winslow  et  al.  (195  Fed.  578,  227  U.  S. 
202.)  Two  indictments  (113  and  114)  returned  September  19, 
1911,  in  the  District  of  Massachusetts,  charging  combination, 
conspiracy,  and  monopoly  in  trade  in  shoe  machinery.  De- 
murrer to  indictment  113  was  sustained,  and  demurrer  to  in- 
dictment 114  was  overurled  as  to  first  count  and  sustained  as 
to  second  count.  An  appeal  was  taken  by  the  United  States 
from  decision  in  No.  113,  which  was  affirmed  by  the  Supreme 
Court.  Pending.  (See  United  States  v.  United  Shoe  Ma- 
chinery Co.  et  al.,  382-3 ;  also  proceeding  to  enforce  section  3 
of  Clayton  Law,  relating  to  "tying"  clauses,  page  396.) 


382  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

United  States  v.  The  Colorado  and  Wyoming  Lumber  Dealers' 
Association  and  The  Lumber  Secretaries'  Bureau  of  Informa- 
tion. Petition  filed  September  25,  1911,  in  the  Circuit  Court, 
District  of  Colorado,  for  injunction  against  defendants  for 
conspiracy  to  restrain  trade  in  lumber  and  its  products.  The 
taking  of  testimony  has  been  completed  and  further  action  is 
being  deferred,  awaiting  decision  in  the  following  case,  U.  S.  v. 
Hollis. 

United  States  v.  Willard  G.  Hollis  et  al.  Petition  in  equity  filed 
October,  1911,  in  the  Circuit  Court,  District  of  Minnesota, 
against  the  Lumber  Secretaries'  Bureau  of  Information.  The 
Lumberman  Publishing  Company,  and  certain  individuals  al- 
leging conspiracy  and  combination  in  the  lumber  trade.  Ar- 
gued and  submitted  in  December,  1914,  and  decision  awaited. 
(See  action  pending,  United  States  v.  Hart-wick,  page  381.) 

United  States  v.  United  States  Steel  Corporation  and  others. 
(223  Fed.  55.)  Petition  filed  October  27,  1911,  in  District 
Court  for  District  of  New  Jersey  alleging  a  combination  in  re- 
straint of  interstate  commerce  in  iron  and  steel  and  their  prod- 
ucts and  an  attempt  to  monopolize  the  same.  Case  argued 
before  circuit  judges  in  October,  1914.  Decision  adverse  to 
government  handed  down  June  3,  1915.  Attorney-General  has 
announced  that  an  appeal  will  be  taken  to  the  Supreme  Court. 

United  States  v.  Joe  Cotton  et  al.  Defendants  were,  on  Novem- 
ber 15,  1911,  indicted  in  the  Southern  District  of  Mississippi 
for  conspiring  to  restrain  interstate  commerce  during  course 
of  a  strike  on  the  Illinois  Central  Railroad.  The  strike  having 
been  terminated,  no  further  action  has  been  taken. 

United  States  v.  National  Cash  Register  Co.  et  al.  Petition  filed 
December  4,  1911,  in  Circuit  Court,  Southern  District  of  Ohio, 
alleging  conspiracy  and  monopoly  in  the  manufacture,  sale, 
and  shipment  of  cash  registers  and  other  registering  devices. 
Issue  joined  and  taking  of  testimony  will  shortly  be  com- 
menced. Delay  due  to  prosecution  of  criminal  case,  United 
States  v.  John  H.  Patterson  et  al., — see  page  363. 

United  States  v.  United  Shoe  Machinery  Co.  et  al.  (222  Fed. 
349.)  .Petition  in  equity  filed  December  12,  1911,  in  Circuit 
Court,  District  of  Massachusetts,  alleging  combinations  and 
conspiracies  in  restraint  of  interstate  and  foreign  trade  in  shoe 
machinery,  and  praying  for  perpetual  restraining  order,  disso- 
lution of  company,  and  restoration  of  normal  conditions.  De- 
cision adverse  to  government  handed  down  March  18,  1915. 


APPENDIX  P.  383 

An  appeal  has  been  taken  to  the  Supreme  Court.  (See  United 
States  v.  Winslow,  page  381 ;  and  also  United  States  v.  United 
Shoe  Machinery  Co.  et  al.,  page  396.  In  the  last-named  action 
relief  in  equity  is  sought  enforcing  Section  3  of  the  Clayton 
Law.) 

United  States  v.  A.  Haines  et  al.  Two  indictments  returned  De- 
cember 16,  1911,  in  the  Southern  District  of  Florida  against 
members  of  Longshoremen's  Association  for  combining,  con- 
spiring, and  agreeing  to  interfere  with  interstate  operations  of 
the  Mason  Forwarding  Company  which  had  declined  to  recog- 
nize one  of  the  conspirators  known  as  the  "walking  delegate." 
See  following  case. 

United  States  v.  A.  Haines  et  al.  Two  indictments  returned  De- 
cember 16,  1911,  in  the  Southern  District  of  Florida  for  com- 
bining, conspiring,  and  agreeing  upon  rules,  regulations,  re- 
quirements, etc.,  with  reference  to  the  employment  of  workmen 
to  load  vessels  with  lumber  for  interstate  shipment.  This  and 
preceding  case  were  consolidated  for  trial.  Defendants  entered 
pleas  of  guilty  and  were  sentenced  each  to  four  hours'  confine- 
ment. 

United  States  v.  Pacific  Coast  Plumbing  Supply  Association  et  al. 
Petition  filed  December  18,  1911,  in  Circuit  Court,  Southern 
District  of  California,  alleging  unlawful  restraint  of  trade  and 
commerce  in  plumbing  supplies  on  the  Pacific  coast.  Decree 
enjoining  defendants  from  further  committing  the  acts  com- 
plained of  was  entered  January  6,  1912. 

United  States  v.  The  Keystone  Watch  Case  Company  et  al.  (218 
Fed.  502.)  Petition  filed  December  20,  1911,  in  the  Circuit 
Court,  Eastern  District  of  Pennsylvania,  alleging  unlawful 
contracts,  combinations,  and  conspiracies  to  monopolize  trade 
in  filled  watch  cases  and  watches,  and  praying  for  a  permanent 
decree  ordering  the  dissolution  of  the  company  and  enjoining 
defendants  from  further  committing  the  unlawful  acts  com- 
plained of.  January  2,  1915,  decision  partly  favorable  and 
partly  adverse  to  government  handed  down.  Decree  entered 
June  4,  1915,  from  which  government  has  appealed  to  the  Su- 
preme Court. 

United  States  v.  American  Naval  Stores  Company  et  al.  Petition 
filed  January  8,  1912,  in  the  District  Court,  Southern  District 
of  Georgia,  alleging  unlawful  combination  and  conspiracy  in 
restraint  of  interstate  and  foreign  commerce  in  turpentine  and 
resin.  Demurrer  overruled  January  2,  1913.  Defendant  sus- 


384  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

pended  business  in  March,  1913,  on  account  of  financial  diffi- 
culties, and  since  then  no  further  action  has  been  taken. 

United  States  v.  New  Departure  Manufacturing  Company  et  al. 
(204  Fed.  107.)  Indictment  returned  January  8,  1912,  in  the 
Western  District  of  New  York  against  six  corporations  and 
eighteen  individual  defendants,  charging  unlawful  combination 
and  conspiracy  for  the  purpose  of  monopolizing  the  coaster- 
brake  business,  and  fixing  and  maintaining  prices  for  coaster 
brakes.  Plea  in  abatement  overruled  April  2,  1912.  Demurrer 
overruled  March  12,  1913.  Defendants  entered  pleas  of  guilty 
and  nolo  contendere  and  fines  aggregating  $81,500  were  im- 
posed in  May,  1913. 

United  States  v.  The  North  Pacific  Wharves  &  Trading  Co.  et  al. 
Indictment  (834-6)  returned  February  12,  1912,  in  the  First 
Division,  District  of  Alaska,  charging  defendants  with  con- 
spiring to  monopolize  and  monopolizing  the  coal  business  at 
Skagway.  Demurrer  sustained  May  3,  1912. 

United  States  v.  Pacific  &  Arctic  Railway  &  Navigation  Co.  et  al. 
Indictment  (835-6)  returned  February  12,  1912,  in  the  First 
Division,  District  of  Alaska,  charging  defendants  with  engaging 
in  a  conspiracy  to  monopolize  and  monopolizing  the  transporta- 
tion business  between  the  head  of  Lynn  Canal  and  the  head- 
waters of  the  Yukon  River.  Demurrer  sustained  on  May  3, 
1912. 

United  States  v.  The  North  Pacific  Wharves  &  Trading  Co.  et  al. 
Indictment  (836-6)  returned  February  12,  1912,  in  the  First 
Division,  District  of  Alaska,  charging  defendants  (i)  with  en- 
gaging in  a  conspiracy  and  combination  in  restraint  of  trade 
and  commerce  by  way  of  combining  the  four  wharves  at  Skag- 
way under  one  management,  and  (2)  with  monopolizing  the 
wharfinger  business  at  Skagway.  Demurrer  overruled  on  May 
3,  1912.  First  trial  resulted  in  disagreement  of  jury  on  Janu- 
ary 27,  1913.  Corporation  defendants  entered  pleas  of  guilty 
and  on  February  2,  1914,  fines  aggregating  $19,500  were  im- 
posed. Case  dismissed  as  to  individual  defendants. 

United  States  v.  Pacific  &  Arctic  Railway  and  Navigation  Co.  et 
al.  (228  U.  S.  87.)  Indictment  (837-6)  returned  February 
13,  1912,  in  the  First  Division,  District  of  Alaska,  charging  de- 
fendants with  engaging  in  a  conspiracy  to  monopolize  and 
monopolizing  the  steamship  transportation  between  Puget 
Sound  and  6ritish  Columbia  ports  in  the  south  and  Skagway 


APPENDIX  P. 

in  the  north.  Demurrer  sustained,  except  as  to  corporation  de- 
fendants to  count  No.  6.  Upon  appeal  to  the  Supreme  Court 
the  judgment  was  reversed  and  the  case  remanded  for  further 
proceedings.  Corporation  defendants  entered  pleas  of  guilty 
and  on  February  2,  1914,  fines  aggregating  $8,500  were  im- 
posed. Case  dismissed  as  to  individual  defendants. 

United  States  v.  John  H.  Patterson  et  al.  (201  Fed.  697,  205 
Fed.  292,  222  Fed.  599.)  Indictment  returned  February  22, 
1912,  in  the  Southern  District  of  Ohio,  against  John  H.  Patter- 
son, president,  and  twenty-nine  other  officials  and  employees 
of  the  National  Cash  Register  Company,  alleging  a  conspiracy 
in  restraint  of  interstate  trade  and  commerce  in  cash  registers, 
resulting  in  an  unlawful  monopoly  of  the  industry.  Demurrer 
overruled  June  26,  1912.  Trial  resulted  in  a  verdict  of  guilty 
as  to  twenty-nine  of  the  thirty  defendants  and  fines  aggregating 
$135,000  and  jail  sentences  ranging  from  nine  months  to  one 
year  were  imposed.  Defendants  appealed  to  the  Circuit  Court 
of  Appeals.  In  a  decision  handed  down  March  13,  1915,  the 
judgment  of  conviction  was  reversed  and  the  case  remanded 
for  new  trial  on  certain  counts.  The  government  petitioned  the 
Supreme  Court  for  a  writ  of  certiorari  which  was  denied.  (For 
previous  criminal  proceeding,  also  for  suit  in  equity,  see  pages 
363  and  382.) 

United  States  v.  American-Asiatic  Steamship  Company  et  al. 
(220  Fed.  230.)  Petition  in  equity  filed  March  30,  1912,  in 
Southern  District  of  New  York,  charging  defendants  with  com- 
bining and  conspiring,  entering  into  unlawful  contracts  and 
pooling  agreements,  and  allowing  rebates,  for  the  purpose  of 
securing  a  monopoly  of  the  business  of  transporting  freight  be- 
tween ports  on  the  Atlantic  coast  of  the  United  States  and 
ports  in  the  Philippine  Islands,  Japan,  China,  and  the  Far  East. 
A  decision  in  the  main  adverse  to  the  government  handed  down 
February  3,  1915.  The  government  has  appealed  to  the  Su- 
preme Court. 

United  States  v.  Julius  F.  Miller,  Secretary,  New  York  Charcoal 
Company  et  al.  Indictment  returned  April  2,  1912,  in  the  East- 
ern District  of  New  York  charging  defendants  with  restraining 
interstate  trade  and  commerce  in  charcoal.  Demurrer  sus- 
tained October  17,  1912. 

United  States  v.  International  Harvester  Company  et  al.     (214 
Fed.  987.)    Petition  filed  April  30,  1912,  in  the  District  Court, 
25 


386  MANUAL  otf  FEDERAL  TRADE  COMMISSION. 

District  of  Minnesota,  allleging  the  acquisition  and  maintenance 
of  a  monopoly  in  harvesting  and  agricultural  machinery  and 
implements  and  twine.  Testimony  taken,  expediting  certificate 
filed,  and  case  argued  before  three  circuit  judges  at  St.  Paul 
during  November,  1913.  Decision  in  favor  of  the  government 
handed  down  August  12,  1914.  The  defendants  appealed  to  the 
Supreme  Court  where  the  case  was  argued  in  April,  1915,  June 
2,  1915,  restored  to  the  docket  for  reargument  at  Fall  Term, 


United  States  v.  Aluminum  Company  of  America.  Petition  filed 
May  16,  1912,  in  the  District  Court,  Western  District  of  Penn- 
sylvania, to  prevent  a  further  monopoly  of  and  restraint  upon 
the  interstate  and  foreign  trade  and  commerce  in  aluminum 
and  aluminum  wares.  Consent  decree  granting  relief  substan- 
tially as  prayed  for  was  entered  at  Pittsburgh  on  June  7,  1912. 

United  States  v.  Herman  Sielcken  et  al.  Petition  filed  May  18, 
1912,  in  the  District  Court,  Southern  District  of  New  York, 
alleging  conspiracy  to  reduce  the  production  of  coffee,  espe- 
cially in  the  State  of  San  Paulo,  Brazil,  and  to  withdraw  a  large 
per  cent  of  coffee  from  the  market  by  purchase.  Motion  for 
preliminary  injunction  denied.  Upon  the  advice  of  the  State 
Department  that  representations  had  been  made  by  the  Brazil- 
ian government  that  the  entire  quantity  of  coffee  which  was 
being  withheld  from  market  had  been  sold  to  a  large  number 
of  dealers  throughout  the  United  States,  an  order  of  dismissal 
was  entered  May  29,  1913. 

United  States  v.  Prince  Line  (Limited)  et  al.  (220  Fed.  230.) 
Petition  filed  June  5,  1912,  in  the  District  Court,  Southern  Dis- 
trict of  New  York,  charging  defendants,  as  common  carriers 
of  freight  and  passengers  between  ports  of  the  United  States 
and  ports  in  the  Republic  of  Brazil,  with  acquiring  and  main- 
taining a  substantial  monopoly  by  means  of  contracts,  rebates, 
and  other  unlawful  acts,  and  praying  for  an  annulment  of  said 
contracts,  agreements,  etc.  A  decision  in  the  main  adverse  to 
the  government  handed  down  February  3,  1915.  The  govern- 
ment has  appealed  to  the  Supreme  Court. 

United  States  v.  Central-West  Publishing  Co.  et  al.  Petition  filed 
August  3,  1912,  in  the  District  Court,  Northern  District  of 
Illinois,  charging  defendants  with  engaging  in  unfair  competi- 
tion against  each  other  and  against  others  engaged  in  com- 
peting industries,  with  the  intent  to  restrain  and  monopolize 


APPENDIX  P.  387 

interstate  trade  and  commerce  in  plate  and  ready-print  matter. 
Consent  decree,  granting  relief  as  prayed  for,  entered  at  Chi- 
cago on  August  3,  1912. 

United  States  v.  Associated  Billposters  and  Distributors  of  the 
United  States  and  Canada  et  al.  Petition  filed  August  3,  1912, 
in  the  District  Court,  Northern  District  of  Illinois,  charging  de- 
fendants with  engaging  in  a  combination  and  conspiracy  to 
place  unlawful  restraints  upon  interstate  and  foreign  trade  and 
commerce  in  posters.  A  demurrer  to  the  petition  having  been 
overruled,  this  case  was  tried  in  open  court  in  July,  1915,  and 
a  decision  is  awaited. 

United  States  v.  Motion  Picture  Patents  Company  et  al.  Petition 
filed  August  15,  1912,  in  the  District  Court,  Eastern  District  of 
Pennsylvania,  to  remove  the  restraints  which  defendants  have 
imposed  upon  interstate  and  foreign  trade  and  commerce  in 
machines,  appliances,  and  apparatus  relating  to  the  motion- 
picture  art,  and  upon  persons  engaged  in  such  trade  and  com- 
merce. October  I,  1915,  decision  in  favor  of  the  government 
handed  down. 

United  States  v.  Calvin  N.  Payne  et  al.  Indictment  returned  Au- 
gust 29,  1912,  in  the  Northern  District  of  Texas,  charging  de- 
fendants with  engaging  in  a  conspiracy  in  restraint  of  interstate 
and  foreign  trade  and  commerce  in  oils  and  oil  products.  Nolle 
prosequi  entered  February  25,  1913. 

United  States  v.  Consolidated  Rendering  Co.  Indictment  re- 
turned October  31,  1912,  in  the  District  of  Massachusetts, 
charging  monopoly  of  interstate  trade  and  commerce  in  render- 
ing materials.  December  i,  1913,  plea  of  nolo  contendere  by 
defendant  and  fine  of  $5,000  imposed. 

United  States  v.  Consolidated  Rendering  Company  et  al.  Indict- 
ment returned  October  31,  1912,  in  the  District  of  Massachu- 
setts, charging  monopoly  of  interstate  trade  and  commerce  in 
rendering  materials.  December  i,  1913,  plea  of  nolo  contendere 
by  corporation  and  fine  of  $3,000  imposed.  Indictment  nolle 
prossed  as  to  individual  defendants. 

United  States  v.  The  Master  Horseshoers'  National  Protective 
Association  of  America  and  others.  Petition  filed  December 
12,  1912,  in  the  Eastern  District  of  Michigan,  charging  defend- 
ants with  engaging  in  a  combination  and  conspiracy  in  restraint 
of  trade  and  commerce  in  drilled  horseshoes,  adjustable  calks, 
and  rubber  hoof  pads.  Consent  decrees  entered  as  to  certain 


388  MANUAL  of  FEDERAL  TRADE  COMMISSION. 

defendants.  April  4,  1914,  demurrers  overruled.  Negotia- 
tions looking  to  the  entry  of  a  consent  decree  now  pending. 

United  States  v.  Philadelphia  Jobbing  Confectioners'  Association 
et  al.  Petition  filed  December  13,  1912,  in  the  Eastern  District 
of  Pennsylvania,  charging  defendants  with  unlawfully  inter- 
fering with  interstate  commerce  in  candies  and  confections. 
Consent  decree  entered  February  17,  1913. 

United  States  v.  Elgin  Board  of  Trade  et  al.  Petition  filed  De- 
cember 14,  1912,  in  the  Northern  District  of  Illinois,  charging 
defendants  with  combining  and  conspiring  in  the  interest  of  a 
number  of  large  centralizing  concerns  to  restrain  interstate 
commerce  in  butter  and  butter  fat,  and  arbitrarily  fixing  the 
price  thereof  to  obtain  throughout  the  United  States.  Issue 
joined  and  taking  of  testimony  in  open  court  will  be  commenced 
on  January  8,  1914,  Consent  decree  entered  April  27,  1914. 

United  States  v.  Charles  S.  Mellen,  Hdson  J.  Chamberlin,  and  Al- 
fred W.  Smithers.  Indictment  returned  December  23,  1912,  in 
the  Southern  District  of  New  York,  charging  a  combination 
and  conspiracy  to  restrain  interstate  commerce  by  preventing 
the  construction  of  subsidiary  lines  of  the  Central  Vermont 
Railway  Company  (itself  a  subsidiary  of  the  Grand  Trunk 
Railway  Company)  from  Palmer,  Mass.,  to  Providence,  R.  I. ; 
from  White  River  Junction,  Vermont,  to  Boston;  and  from 
Boston  to  Blackstone,  connecting  there  with  the  Palmer-Provi- 
dence line.  Case  at  issue  awaiting  trial.  (For  suit  in  equity, 
see  pages  374-5  ;  for  criminal  proceeding  against  individual  di- 
rectors and  officers,  see  pages  388  and  395.) 

United  States  v.  Kellogg  Toasted  Corn  Flake  Company  et  al. 
(222  Fed.  725.)  Petition  filed  December  26,  1912,  in  the  East- 
ern District  of  Michigan,  alleging  that  the  business  policy  of  the 
defendant  company  in  fixing  and  enforcing  resale  prices  on 
Kellogg's  Toasted  Corn  Flakes  is  unlawful  and  tends  to  re- 
strain and  monopolize  interstate  commerce  in  said  product. 
July  14,  1914,  hearing  on  motion  to  dismiss  involving  merits  of 
case.  April  14,  1915,  decision  in  favor  of  the  government. 
September  20,  1915,  final  decree  entered.  This  decree  is  re- 
garded as  a  model  on  the  question  of  resale  price  fixing. 

United  States  v.  Page  et  al.  Indictment  returned  February  5, 
1913,  at  Portland,  District  of  Oregon,  charging  fifteen  individ- 
uals, through  the  medium  of  the  Produce  Merchants'  Ex- 
change, of  Portland,  with  unlawfully  controlling  the  purchase, 


APPENDIX  P.  389 

distribution,  and  sale  of  approximately  ninety  per  cent  of  the 
produce,  fruit,  and  vegetables  shipped  into  the  State  of  Oregon. 
The  defendants  entered  pleas  of  guilty  on  February  21,  1913, 
and  fines  aggregating  $8,450  were  imposed  and  collected. 

United  States  v.  Krentler-Arnold  Hinge  Last  Company  et  al. 
Petition  filed  February  7,  1913,  in  the  District  Court,  Eastern 
District  of  Michigan,  alleging  the  unlawful  control  by  defend- 
ant of  the  interstate  trade  and  commerce  in  shoe  and  boot  lasts, 
both  patented  and  unpatented.  Consent  decree  was  entered  at 
Detroit,  Michigan,  on  February  7,  1913. 

United  States  v.  United  Shoe  Machinery  Company  of  New  Jer- 
sey et  al.  Petition  filed  February  8,  1913,  in  the  District  Court 
at  Trenton,  New  Jersey,  seeking  to  have  annulled  an  alleged 
unlawful  contract  involving  "inseam  trimming  machines." 
Further  action  in  this  case  has  been  deferred  awaiting  final 
outcome  of  case  pending  against  same  company  in  Massachu- 
setts, pages  382-3. 

United  States  v.  The  Southern  Wholesale  Grocers'  Association 
et  al.  (207  Fed.  434.)  Petition  for  rule  to  show  cause  why  an 
attachment  for  a  criminal  contempt  of  court  for  alleged  viola- 
tion of  the  terms  of  a  decree,  entered  October  17,  1911  (see  No. 
9) ,  should  not  issue  was  filed  in  the  District  Court  at  Birming- 
ham, Northern  District  of  Alabama,  on  February  10,  1913.  The 
association  and  three  individual  members  were  adjudged  guilty 
of  contempt  of  court,  and  on  July  29,  1913,  fines  aggregating 
$5,500  were  imposed. 

United  States  v.  Board  of  Trade  of  the  City  of  Chicago  et  al.  Pe- 
tition filed  February  n,  1913,  in  the  District  Court  at  Chicago, 
Illinois,  attacking  Rule  33  of  the  Chicago  Board  of  Trade,  by 
virtue  of  which  it  is  alleged  the  price  of  all  corn,  oats,  wheat, 
and  rye  arriving  in  Chicago  at  times  when  the  board  of  trade  is 
not  in  session  is  arbitrarily  determined.  Motion  to  strike  out 
certain  portions  of  defendants'  answer  sustained.  The  court 
announced  its  decision  of  this  case  in  favor  of  the  government 
on  September  8,  1915,  and  ordered  the  preparation  of  an  appro- 
priate decree.  No  opinion  was  filed. 

United  States  v.  The  Cleveland  Stone  Company  et  al.  Petition 
filed  February  12,  1913,  in  the  District  Court  at  Cleveland, 
Northern  District  of  Ohio,  charging  defendants  with  establish- 
ing and  maintaining  a  practical  monopoly  of  the  stone  business. 
Set  for  hearing  at  the  Fall  Term  of  Court,  1915. 


39O  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

United  States  v.  The  Delaware,  Lackawanna  &  Western  Railroad 
Company  and  The  Delaware,  Lackawanna  &  Western  Coal 
Company.  (213  Fed.  240,  238  U.  S.  516.)  Petition  filed  Feb- 
ruary 13,  1913,  in  the  District  Court  at  Trenton,  New  Jersey, 
charging  defendants  with  transporting  coal  in  which  it  had  an 
interest  in  violation  of  the  commodities  clause  of  the  interstate 
commerce  act,  and  with  entering  into  an  unlawful  contract 
whereby  the  coal  company  acquired  a  monopoly  of  the  sale  of 
anthracite  coal  produced  along  the  line  of  the  railroad  com- 
pany, in  violation  of  the  Anti-trust  act.  April  7,  1914,  decision 
adverse  to  the  government  handed  down.  Appealed  by  govern- 
ment to  Supreme  Court.  June  21,  1915,  decree  of  lower  court 
reversed.  August  n,  1915,  final  decree  entered. 

United  States  v.  The  McCaskey  Register  Company  et  al.  Petition 
filed  February  20,  1913,  in  the  District  Court  at  Cleveland, 
Northern  District  of  Ohio,  charging  defendants  with  conspir- 
ing to  restrain  and  monopolize  the  manufacture  and  sale  of  ac- 
count registers  and  appliances.  Upon  a  reinvestigation  of  the 
facts  in  this  case,  the  department  reached  the  conclusion  that 
the  charges  against  the  McCaskey  Company  were  not  well 
founded.  Accordingly  the  petition  was  dismissed  without  prej- 
udice on  January  7,  1915. 

United  States  v.  International  Brotherhood  of  Electrical  Work- 
ers, Local  Unions  Nos.  9  and  134  et  al.  Petition  filed  February 
24,  1913,  in  the  District  Court  at  Chicago,  Northern  District  of 
Illinois,  seeking  to  enjoin  defendants  from  interfering  with  the 
interstate  business  of  the  Postal  Telegraph-Cable  Company.  A 
temporary  injunction  was  granted.  Decree  making  temporary 
injunction  permanent  entered  February  27,  1914, 

United  States  v.  Corn  Products  Refining  Company  et  al.  Petition 
filed  March  I,  1913,  in  the  District  Court  at  New  York  City, 
charging  defendants  with  monopolizing  interstate  trade  and 
commerce  in  corn  products,  and  praying  for  the  dissolution  of 
the  combination.  Issue  joined.  The  taking  of  testimony  has 
been  completed  and  the  case  has  been  set  for  early  hearing. 

United  States  v.  The  American  Thread  Company  et  al.  Petition 
filed  March  3,  1913,  in  the  District  Court  at  Trenton,  New  Jer- 
sey, charging  defendants  with  monopolizing  the  thread  indus- 
try. Answers  of  defendants  filed  September  10,  1913.  Consent 
decree  entered  June  2,  1914,  granting  relief  as  prayed  by  the 


APPENDIX  P.  391 

government.    This  decree  is  regarded  as  a  model  on  questions 
of  unfair  trade  methods. 

United  States  v.  The  Burroughs  Adding  Machine  Company  et  al. 
Petition  filed  March  3,  1913,  in  the  District  Court  at  Detroit, 
Michigan,  alleging  that  defendants  were  engaged  in  a  con- 
spiracy to  monopolize  interstate  trade  and  commerce  in  adding 
machines.  A  consent  decree  was  entered  at  Detroit  on  March 

3,  1913. 

United  States  v.  American  Coal  Products  Company  et  al.  Peti- 
tion filed  March  3,  1913,  in  the  District  Court  at  New  York 
City,  charging  defendants  with  monopolizing  the  supply  of  coal 
tar  and  restraining  the  trade  of  competitors  in  the  purchase  of 
coal  tar  and  in  the  manufacture  and  sale  of  tarred  roofing  felts, 
coal  tar  pitch,  and  other  coal  tar  products.  A  consent  decree 
was  entered  on  March  4,  1913. 

United  States  v.  Terminal  Railroad  Association  of  St.  Louis  et  al. 
Petition  filed  March  4,  1913,  in  the  District  Court  at  St.  Louis, 
Eastern  District  of  Missouri,  alleging  a  conspiracy  on  the  part 
of  the  members  of  the  St.  Louis  Coal  Traffic  Bureau  to  sup- 
press and  eliminate  competition  in  various  rates  for  the  trans- 
portation of  soft  coal  from  the  State  of  Illinois  to  the  city  of 
St.  Louis,  Missouri.  The  increased  rates  having  been  upheld 
by  the  Interstate  Commerce  Commission  in  a  decision  handed 
down  January  29,  1915,  this  case  was  dismissed  without  preju- 
dice on  September  20,  1915. 

United  States  v.  The  New  Departure  Manufacturing  Company 
et  al.  Petition  filed  May  27,  1913,  in  the  District  Court  at 
Rochester,  Western  District  of  New  York,  alleging  that  de- 
fendants entered  into  a  conspiracy  and  combination  and  de- 
vised a  license  agreement  for  the  purpose  of  restraining  and 
monopolizing  the  manufacture  and  sale  of  bicycle  and  motor- 
cycle parts  and  coaster  brakes.  An  agreed  decree  was  entered 
at  Rochester  on  May  27,  1913. 

United  States  v.  White  et  al.  Indictment  returned  June  7,  1913, 
in  the  District  Court  for  the  Southern  District  of  West  Vir- 
ginia, against  nineteen  members  of  the  United  Mine  Workers 
of  America,  alleging  a  conspiracy  to  interfere  with  interstate 
commerce  in  coal  mined  in  West  Virginia.  Nolle  prosequi  en- 
tered June  20,  1914. 

United  States  v.  Eastman  Kodak  Company  et  al.  Petition  filed 
June  9,  1913,  in  the  District  Court  at  Buffalo,  Western  District 


392  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

of  New  York,  alleging  that  defendants  have  acquired  a  monop- 
oly of  the  business  of  manufacturing,  selling,  and  distributing 
photographic  supplies.  Testimony  taken  in  open  court.  A 
decision  favorable  to  the  government  was  handed  down  on  Au- 
gust 24,  1915,  and  the  form  of  decree  to  be  entered  is  now 
under  consideration. 

United  States  v.  The  Quaker  Oats  Company  et  al.  Petition  filed 
June  n,  1913,  in  the  District  Court  at  Chicago,  Illinois,  alleging 
combination  to  restrain  and  monopolize  interstate  trade  and 
commerce  in  oatmeal  products  and  by-products.  The  taking  of 
testimony  has  been  completed  and  the  case  is  being  prepared 
for  early  hearing. 

United  States  v.  Hippen  et  al.  Indictment  returned  June  25, 
1913,  in  the  District  Court  for  the  Western  District  of  Okla- 
homa against  The  Oklahoma  Brokerage  Company  and  two 
other  corporations  and  the  officers  thereof,  alleging  a  con- 
spiracy to  restrain  and  monopolize  interstate  trade  and  com- 
merce in  fruits  and  vegetables.  Demurrer  sustained  October 


United  States  v.  Thompson  et  al.  Indictment  returned  July  i, 
1913,  in  the  District  Court  for  the  Southern  District  of  New 
York,  alleging  that  the  defendants  conspired  to  run  a  corner  in 
cotton  on  the  New  York  Cotton  Exchange.  Defendants  en- 
tered pleas  of  nolo  contendere  in  December,  1913,  and  fines  ag- 
gregating $18,000  were  assessed.  (See  United  States  v.  Patten, 
page  377.) 

United  States  v.  American  Telephone  &  Telegraph  Company,  et 
al.  Petition  filed  July  24,  1913,  in  the  District  Court  at  Port- 
land, Ore.,  seeking  to  destroy  a  monopoly  of  the  telephone  busi- 
ness on  the  Pacific  Coast.  Terminated  by  entry  of  a  consent  de- 
cree on  March  26,  1914. 

United  States  v.  Reading  Company  et  at.  (Anthracite  coal  com- 
bination.) Petition  in  equity  filed  September  2,  1913,  in  the 
District  Court  at  Philadelphia,  Pa.,  against  a  combination  con- 
sisting of  Reading  Company  and  affiliated  corporations,  charg- 
ing it  with  restraining  and  monopolizing  trade  in  anthracite 
coal.  Decision  handed  down  on  July  3,  1914,  holding  combina- 
tion of  competing  coal  companies  illegal  but  deciding  against 
the  government  on  all  other  points.  Case  will  be  appealed. 
(As  to  earlier  suit  in  equity,  see  pages  371-2.) 


APPENDIX  P.  393 

United  States  v.  The  National  Wholesale  Jewelers'  Association  et 
al.  Petition  filed  November  18,  1913,  in  the  District  Court  at 
New  York  City,  charging  defendants  with  conspiring  to  elim- 
inate all  competition — except  as  between  wholesalers  or  job- 
bers— for  the  trade  of  all  classes  of  retail  dealers  in  jewelry  and 
jewelry  products. 

United  States  v.  American  Can  Company  et  al.  Petition  filed  No- 
vember 29,  1913,  in  the  District  Court  at  Baltimore,  Md.,  alleg- 
ing monopolization  of  the  business  of  making  tin  cans.  The 
taking  of  testimony  has  been  completed  and  the  case  was  argued 
and  submitted  to  the  court  in  October,  1915. 

United  States  v.  John  P.  White  et  al.  Indictment  returned 
December  I,  1913,  in  the  District  Court,  Pueblo,  Colo.,  charg- 
ing officials  and  members  of  the  United  Mine  Workers  of 
America  with  monopolizing  all  diggers  of  coal  and  mine  labor- 
ers and  with  restraining  interstate  commerce  in  coal.  Pending. 

United  States  v.  Frank  J.  Hayes  et  al.  Indictment  returned  De- 
cember i,  1913,  in  the  District  Court,  Pueblo,  Colorado,  charg- 
ing a  combination  and  conspiracy  by  mine  workers  to  interfere 
with  the  mining  of  coal  in  Colorado  and  its  transportation  to 
and  sale  in  other  states.  Pending. 

United  States  v.  Southern  Pacific  Company,  Central  Pacific  Rail- 
way Company  et  al.  Petition  in  equity  filed  February  n,  1914, 
in  the  District  Court  at  Salt  Lake  City,  Utah,  to  compel  the 
Southern  Pacific  to  relinquish  its  control  of  the  Central  Pacific. 
The  taking  of  testimony  was  commenced  October  21,  1914,  and 
has  now  been  completed.  Set  for  hearing  in  the  District  Court 
on  December  I,  1915. 

United  States  v.  Lehigh  Valley  Railroad  Company  et  al.  Petition 
filed  March  18,  1914,  in  the  District  Court  at  New  York  City, 
New  York,  charging  the  defendants  with  having  monopolized 
the  production,  transportation  and  sale  of  anthracite  coal  from 
mines  tributary  to  Lehigh  Valley  Railroad  Company  in  viola- 
tion of  the  Anti-trust  act,  and  charging  the  said  railroad  com- 
pany with  transporting  in  interstate  commerce  coal  in  which  it 
has  an  interest,  in  violation  of  the  Commodity  Clause  of  the 
Act  to  Regulate  Commerce.  Argued  in  November,  1914.  Opin- 
ion dismissing  petition  handed  down  December  21,  1914.  Case 
appealed  to  Supreme  Court. 

United  States  v.  Knauer  et  al.  Indictment  returned  June  4,  1914, 
at  Des  Moines,  Southern  District  of  Iowa,  charging  defendants 


394  MANUAL  OF  FEDERAL  TRADE  COMMISSION. 

with  having  entered  into  a  combination  in  restraint  of  trade  in 
plumbing  supplies.  Motion  to  quash  and  demurrer  overruled 
November  25,  1914.  Trial  commenced  February  10,  1915,  and 
verdict  of  guilty  returned  February  24,  1915.  Four  defendants 
fined  amounts  aggregating  $3,000  and  writ  of  error  granted  as 
to  them.  Case  to  stand  on  motion  for  new  trial  as  to  thirty-one 
defendants  pending  decision  or  writ  of  error  by  Court  of  Ap- 
peals. 

United  States  v.  The  American  Wringer  Company  et  al.  Indict- 
ment returned  May  22,  1914,  in  the  District  Court  for  the 
Western  District  of  Pennsylvania,  charging  defendants  with 
unlawfully  engaging  in  a  combination  in  restraint  of  interstate 
trade  and  commerce  in  clothes  wringers.  Pleas  of  nolo  con- 
tender e  were  entered  on  November  13,  1914,  and  fines  aggre- 
gating $6,000  imposed. 

United  States  v.  Booth  Fisheries  Company  et  al.  Indictment  re- 
turned July  20,  1914,  in  the  District  Court  at  Seattle,  Washing- 
ton, charging  defendants  with  entering  into  a  combination  and 
conspiracy  in  restraint  of  interstate  trade  and  commerce  in 
fresh  fish.  Awaiting  trial. 

United  States  v.  The  New  York,  New  Haven  &  Hartford  Rail- 
road Company  et  al.  Petition  filed  July  23,  1914,  in  the  Dis- 
trict Court  for  the  Southern  District  of  New  York,  alleging 
monopolization  of  transportation  facilities  in  New  England  and 
praying  for  a  dissolution  thereof.  Decree  entered  October  17, 
1914.  (For  dismissal  of  prior  action  for  a  dissolution,  see  pages 
374-5 ;  for  criminal  proceeding  against  directors  and  officers  as 
individuals,  see  pages  388  and  395.) 

United  States  v.  Western  Cantaloupe  Exchange  et  al.  Indict- 
ment returned  August  7,  1914,  in  the  District  Court  at  Chicago, 
Northern  District  of  Illinois,  charging  defendants  with  having 
entered  into  a  combination  to  restrain  and  monopolize  inter- 
state trade  in  cantaloupes.  Awaiting  trial. 

United  States  v.  Collins  et  al.  Indictment  returned  September  4, 
1914,  in  the  Supreme  Court  of  the  District  of  Columbia,  against 
thirty-one  commission  merchants,  charging  them  with  engaging 
in  a  combination  to  fix  arbitrarily  and  without  competition  the 
prices  at  which  country  produce  is  dealt  in  in  the  District  of 
Columbia.  Argued  on  demurrer  during  December,  1914.  De- 
murrer overruled  May  I,  1915,  and  now  awaiting  trial  on  the 
merits. 


APPENDIX  P.  395 

United  States  v.  McCoach  et  al.  Indictment  returned  October  5, 
1914,  in  the  District  Court  at  Pittsburgh,  Western  District  of 
Pennsylvania  against  thirty-three  individuals,  each  a  master 
plumber  and  retail  dealer  in  plumbing  supplies,  charging  them 
with  entering  into  a  combination  to  secure  a  monopoly  of  the 
business  of  selling  and  installing  plumbing  supplies.  Awaiting 
trial. 

United  States  v.  Irving  et  al.  Indictment  returned  October  31, 
1914,  in  the  District  Court  at  Salt  Lake  City,  District  of  Utah, 
against  fourteen  individuals,  each  a  master  plumber  and  retail 
dealer  in  plumbing  supplies,  charging  them  with  entering  into 
a  combination  to  secure  a  monopoly  of  the  business  of  selling 
and  installing  plumbing  supplies.  Argued  on  demurrer  in  Jan- 
uary, 1915.  Demurrer  overruled  and  motion  to  quash  denied 
January  25,  1915.  Awaiting  trial. 

United  States  v.  William  Rockefeller  et  al.  Indictment  returned 
November  2,  1914,  in  the  District  Court  at  New  York,  South- 
ern District  of  New  York,  against  twenty-one  individuals,  each 
at  some  time  a  director  or  officer,  or  both,  of  the  New  York, 
New  Haven  &  Hartford  Railroad  Company,  charging  them 
with  conspiring  to  monopolize  the  transportation  facilities  of 
New  England.  Numerous  demurrers  and  pleas  in  abatement 
argued.  October,  1915,  on  trial.  Superseding  indictment  re- 
turned February  26,  1915.  (For  actions  in  equity  for  dissolu- 
tion of  the  combination,  see  pages  374-5,  and  394;  also,  see 
United  States  v.  Mellen,  page  388.) 

United  States  v.  Isaac  E.  Chapman,  William  L.  Chapman,  and 
Merritt  &  Chapman  Derrick  &  Wrecking  Co.  Indictment  re- 
turned January  27,  1915,  in  the  District  Court,  Southern  Dis- 
trict of  New  York,  charging  a  combination  and  conspiracy  to 
monopolize  interstate  trade  and  commerce  in  the  derrick,  light- 
erage and  wrecking  business  in  New  York  harbor  and  its  en- 
virons and  along  the  Atlantic  coast  of  the  United  States.  De- 
murrer sustained  April  13,  1915. 

United  States  v.  Carl  C.  King  et  al.  Indictment  returned  March 
4,  1915,  in  the  District  Court  at  Boston,  Mass.,  charging  de- 
fendants (Aroostook  Potato  Shippers  Association)  with  enter- 
ing into  a  conspiracy  in  restraint  of  trade  in  potatoes.  Argued 
on  demurrer  in  June,  1915,  and  decision  of  the  court  now 
awaited. 


396  MANUAI,  OF  FEDERAL  TRADE  COMMISSION. 

United  States  v.  Michael  Artery  et  al.,  Northern  District  of 
Illinois.  Eight  indictments  returned  in  January  and  April, 
1915,  against  certain  so-called  business  agents  of  Chicago  labor 
unions,  charging  them  with  combining  and  conspiring  to  pre- 
vent the  unloading  in  Chicago  of  goods  shipped  from  other 
states. 

United  States  v.  Michael  Boyle  et  al.,  Northern  District  of  Illi- 
nois. Two  indictments  returned  April  27,  1915,  against  cer- 
tain so-called  business  agents  of  Chicago  labor  unions,  charg- 
ing them  with  combining  and  conspiring  to  prevent  the  installa- 
tion in  Chicago  of  electrical  appliances  and  lighting  fixtures 
manufactured  in  other  states. 

United  States  v.  S.  F.  Bowser  &  Company,  Inc.,  et  al.,  District  of 
Indiana.  Petition  filed  June  10,  1915,  charging  defendants  with 
combining  to  restrain  and  attempting  to  monopolize  interstate 
trade  and  commerce  in  pumps,  tanks  and  outfits  for  the  storage 
and  handling  of  gasoline  and  other  inflammable  liquids.  A  de- 
cree granting  the  relief  sought  by  the  government  was  entered 
simultaneously  with  the  filing  of  the  petition. 
United  States  v.  United  Shoe  Machinery  Company  et  al.,  East- 
ern District  of  Missouri.  Petition  filed  October  18,  1915, 
charging  that  the  so-called  tying  clauses  in  the  series  of  leases 
used  by  the  defendants  in  the  conduct  of  their  business  are  in 
violation  of  section  3  of  the  Clayton  Law.  A  temporary  re- 
straining order  was  granted  at  the  time  the  petition  was  filed. 
Set  for  hearing  on  October  27,  1915.  (For  decision  adverse  to 
government  in  action  to  restrain,  etc.,  under  Sherman  Law,  see 
pages  282-3 ;  for  criminal  prosecution  of  individual  defendants, 
see  United  States  v.  IVinslozu  et  al.,  page  381.) 
[For  Alphabetic  List  of  Cases  Contained  in  the  foregoing 
Appendix, — see  pages  397  to  401.] 


Alphabetic  List  of  Cases  Contained  in  Appendix  P. 

Anderson  v.  United  States  (82  Fed.  998,  171  U.  S.  604)  365 

Corning,  In  re  (51  Fed.  205)   353 

Debs,  In  re,  petitioner  (158  U.  S.  564)   364 

Greene,  In  re  (52  Fed.  104)  362 

Moore  v.  United  States  (85  Fed.  465)   365 

Terrell,  In  re  (51  Fed.  213)   362 

United  States  v.  Addyston  Pipe  and  Steel  Company  (78  Fed.  712, 

85  Fed.  271,  175  U.  S.  211)    355 

United  States  v.  Agler  (62  Fed.  824)    364 

United  States  v.  Albia  Box  &  Paper  Company  et  al 375 

United  States  v.  Allen  &  Robinson  et  al.  (3  Dist.  Hawaii  664)  368 

United  States  v.  Alluminum  Company  of  America 386 

United  States  v.  American-Asiatic  Steamship  Company  et  al.  (220 

Fed.  230)    385 

United  States  v.  American  Can  Company  et  al 393 

United  States  v.  American  Coal  Products  Company  et  al 391 

United  States  v.  American  Ice  Company  et  al 369 

United  States  v.  American  Naval  Stores  Company  et  al.  (172  Fed. 

455,  186  Fed.  592,  229  U.  S.  373)    374,  383 

United  States  v.  American  Seating  Company  et  al. 371 

United  States  v.  American  Sugar  Refining  Company  et  al.  (173  Fed. 

823,  218  U.  S.  601)    375,  378 

United  States  v.  American  Telephone  &  Telegraph  Company  et  al.  .  392 

United  States  v.  American  Thread  Company  et  al 390 

United  States  v.  American  Tobacco  Company  et  al.  (164  Fed.  700, 

221  U.  S.  106,  191  Fed.  371)    372 

United  States  v.  American  Wringer  Company  et  al 394 

United  States  v.  Armour  &  Co.  et  al.  (142  Fed.  808)  367 

United  States  v.  Armour  Packing  Company  et  al 376 

United  States  v.  Artery,  Michael,  et  al  396 

United   States  v.   Associated   Billposters   and   Distributors   of   the 

United  States  and  Canada  et  al 387 

United  States  v.  Atlantic  Investment  Company  et  al 371 

United  States  v.  Board  of  Trade  of  the  City  of  Chicago  et  al 389 

United  States  v.  Booth  Fisheries  Company  et  al 394 

United  States  v.  Boyle,  Michael,  et  al 396 

United  States  v.  Burroughs  Adding  Machine  Company  et  al 391 

United  States  v.  Cassidy  (67  Fed.  698)   364 

United  States  v.  Central- West  Publishing  Co.  et  al 386 

United  States  v.  Chandler  Ice  and  Cold  Storage  Plant  et  al 369 

United  States  v.  Chapman,  Isaac  E.,  William  L.  Chapman,  and  Mer- 

ritt  &  Chapman  Derrick  &  Wrecking  Co 395 

United  States  v.  Chesapeake  and  Ohio  Fuel  Company  et  al.  (105 

Fed.  93,  115  Fed-  610)   366 

397 


398  ALPHABETIC  LIST  OF  CASES. 

United  States  v.  Chicago  Butter  &  Egg  Board 376 

United  States  v.  Cigarettes,  One  Hundred  and  Seventy-five  Cases  of  373 

United  States  v.  Cleveland  Stone  Company  et  al 389 

United  States  v.  Coal  Dealers'  Association  (85  Fed.  252)  366 

United  States  v.  Collins  et  al 394 

United  States  v.  Colorado  and  Wyoming  Lumber  Dealers'  Asso- 
ciation and  The  Lumber  Secretaries'  Bureau  of  Information  . .  382 

United  States  v.  Consolidated  Rendering  Co 387 

United  States  v.  Consolidated  Rendering  Company  et  al 387 

United  States  v.  Corn  Products  Refining  Company  et  al 390 

United  States  v.  Cotton,  Joe,  et  al 382 

United  States  v.  Debs  et  al.  (64  Fed.  724)  364 

United  States  v.  Debs  et  al 364 

United  States  v.  Debs,  Eugene  V.,  et  al 363 

United  States  v.  The  Delaware,  Lackawanna  &  Western  Railroad 

Company   and   The   Delaware,   Lackawanna   &   Western    Coal 

Company  (213  Fed.  240,  238  U.  S.  516)  390 

United  States  v.  Demund  Lumber  Company  et  al ^. 370 

United  States  v.  Eastern  States  Retail  Lumber  Dealers'  Association. 

(201  Fed.  581,  234  U.  S.  600)  379 

United  States  v.  Eastman  Kodak  Company  et  al 391 

United  States  v.  E.  C.  Knight  Company  (60  Fed.  306,  60  Fed.  934, 

156  U.  S.  1)  363 

United  States  v.  E.  H.  Stafford  Manufacturing  Company  et  al 372 

United  States  v.  E.  I.  du  Pont  de  Nemours  &  Co.  et  al.  (188  Fed. 

127)  372 

United  States  v.  Elliott  (62  Fed.  801,  64  Fed.  27)  364 

United  States  v.  Elgin  Board  of  Trade  et  al 388 

United  States  v.  F.  A.  Amsden  Lumber  Company  et  al 369 

United  States  v.  Federal  Salt  Company 367 

United  States  v.  Federal  Salt  Company  et  al 367 

United  States  v.  Geer,  William  C.,  President  Albia  Box  and  Paper 

Company  et  al 379 

United  States  v.  General  Electric  Company  et  al 378 

United  States  v.  General  Paper  Co.  et  al.  (See  U.  S.  v.  Nelson,  and 

U.  S.  v.  Alexander,  (52  Fed.  646,  201  U.  S.  92,  201  U.  S.  117)  . .  367 

United  States  v.  Gloyd,  Alfred  M.,  et  al 370 

United  States  v.  Great  Lakes  Towing  Company  et  al  (208  Fed.  733, 

217  Fed.  657) 376 

United  States  v.  Greenhut  et  al  (50  Fed.  469)  362 

United  States  v.  Haines,  A.,  et  al 383 

United  States  v.  Hamburg-Amerikanische  Packetfahrt  Actien  Ge- 

sellschaft  and  others  (200  Fed.  806,  216  Fed.  971)  378 

United  States  v.  Hartwick,  Edward  E.,  et  al 381 

United  States  v.  Hayes,  Frank  J.,  et  al 393 

United  States  v.  Hayne,  Frank,  James  A.  Patten,  et  al.  (180  Fed. 

946,  187  Fed.  664,  226  U.  S.  525)  377 

United  States  v.  H.  D.  Corbett  Stationery  Company  et  al 373 

United  States  v.  Heath,  Horatio  W.,  and  Cyrus  S.  Hapgood 378 


ALPHABETIC  LIST  of  CASES.  399 

United  States  v.  Hippen  et  at 392 

United  States  v.  Hogg,  T.  B.,  et  al 370 

United  States  v.  Hollis,  Willard  G.,  et  al 382 

United  States  v.  Holmes  et  al 379 

United  States  v.  Hopkins  et  al.  (82  Fed.  529,  84  Fed.  1018,  171  U.  S. 

578)    365 

United  States  v.  Hunter  Milling  Company,  Blackwell  Milling  and 

Elevator  Company,  and  Frank  Foltz  381 

United  States  v.  Imperial  Window  Glass  Company  et  al 375 

United  States  v.  International  Brotherhood  of  Electrical  Workers, 

Local  Unions  Nos.  9  and  134  et  al 390 

United  States  v.  International  Harvester  Company  et  al.  (214  Fed. 

987)     385 

United  States  v.  Irving  et  al 395 

United  States  v.  Jackson,  Jr.,  E.  E.,  and  seventeen  others 380 

United  States  v.  Jacksonville  Wholesale  Grocers'  Association 367 

United  States  v.  Jellico  Mountain  Coal  Company  (43  Fed.  898,  46 

Fed.  432)    362 

United  States  v.  John  Reardon  &  Sons  Company  and  Consolidated 

Rendering  Co.  (191  U.  S.  454)  377 

United  States  v.  Joint  Traffic  Association  (76  Fed.  895,  89  Fed.  1020, 

171   U.   S.  505)    365 

United  States  v.  Kellogg  Toasted  Corn  Flake  Company  et  al.  (222 

Fed.    725)     388 

United  States  v.  Keystone  Watch  Case  Company  et  al.   (218  Fed. 

502)    383 

United  States  v.  Carl  C.  King  et  al 395 

United  States  v.  Knauer  et  al 393 

United  States  v.  Krentler- Arnold  Hinge  Last  Company  et  al 389 

United  States  v.  Lake  Shore  &  Michigan  Southern  R.  R.  et  al.  (203 

Fed.  295)    381 

United  States  v.  Lehigh  Valley  Railroad  Company  et  al 393 

United  States  v.  Mac  Andrews  &  Forbes  Company  et  al.  (149  Fed. 

823,  149  Fed.  836,  212  U.  S.  585)    367 

United  States  v.  Master  Horseshoers'  National  Protective  Associa- 
tion of  America  and  others  387 

United  States  v.  Mellen,  Charles  S.,  Edson  J.  Chamberlin,  and  Al- 
fred W.  Smithcrs  388 

United  States  v.  Metropolitan  Meat  Company  et  al.  (3  Dist.  Hawaii 

110)    368 

United  States  v.  Miller,  Julius  F.,  Secretary,  New  York  Charcoal 

Company  et  al 385 

United  States  v.  Missouri  Pacific  Railroad  Company  and  twenty- 
four  other  railroads  376 

United  States  v.  Motion  Picture  Patents  Company  et  al 387 

United  States  v.  McCaskey  Register  Company  et  al 390 

United  States  v.  McCoach  et  al 395 

United  States  v.  National  Association  of  Retail  Druggists  et  al.  ...  369 

United  States  v.  National  Cash  Register  Co.  et  al 383 


40O  ALPHABETIC  LIST  otf  CASES. 

United  States  v.  National  Packing  Co.  et  al 375,  376 

United  States  v.  National  Umbrella  Frame  Company  et  al 372 

United  States  v.  National  Wholesale  Jewelers'  Association  et  al.  ...  393 

United  States  v.  Nelson  (52  Fed.  646,  201  U.  S.  92)  362 

United  States  v.  New  Departure  Manufacturing  Company  et  al.  (204 

Fed.    107)     384 

United  States  v.  New  Departure  Manufacturing  Company  et  al 391 

United  States  v.  New  York,  New  Haven  &  Hartford  Railroad  Com- 
pany et  al 374,394 

United  States  v.  North  Pacific  Wharves  &  Trading  Co.  et  al 384 

United  States  v.  Northern  Securities  Co.  et  al.  (120  Fed.  721,  193  U. 

S.   197) 366 

United  States  v.  Nome  Retail  Grocers'  Association  368 

United  States  v.  Otis  Elevator  Co.  et  al 369 

United  States  v.  Pacific  &  Arctic  Railway  &  Navigation  Co.  et  al.  . .  384 
United  States  v.  Pacific  &  Arctic  Railway  and  Navigation  Co.  et  al. 

(228  U.  S.  87)    384 

United  States  v.  Pacific  Coast  Plumbing  Supply  Association  et  al.  . .  383 

United  States  v.  Page  et  al 388 

United  States  v.  Palmer,  Wm.  P.,  and  twenty-five  others 379 

United  States  v.  Palmer,  Wm.  P.,  and  thirty-three  others  379 

United  States  v.  Palmer,  Wm.  P.,  and  seventeen  others  380 

United  States  v.  Palmer,  Wm.  P.,  and  fifteen  others 380 

United  States  v.  Palmer,  Wm.  P.,  and  thirty-eight  others 380 

United  States  v.  Parks,  John  H.,  et  al 375 

United  States  v.  Patterson  et  al.  (55  Fed.  605,  59  Fed.  280)   363 

United  States  v.  Patterson,  John  H.,  et  al.  (201  Fed.  697,  205  Fed. 

292,  222  Fed.  599)    385 

United  States  v.  Payne,  Calvin  N.,  et  al 387 

United  States  v.  Pearce,  Jay  B.,  et  al 380 

United  States  v.  People's  Ice  and  Fuel  Company  and  W.  B.  Lount  .  370 

United  States  v.  Periodical  Clearing  House  et  al 380 

United  States   v.   Philadelphia  Jobbing  Confectioners'  Association 

et  al 383 

United  States  v.  Philips,  Frank  N.,  and  ten  others  380 

United  States  v.  Phrenix  Wholesale  Meat  and  Produce  Company 

et  al 370 

United  States  v.  Prince  Line  (Limited)  et  al.  (220  Fed.  230)  386 

United  States  v.  Purrington  et  al 378 

United  States  v.  Quaker  Oats  Company  et  al 392 

United  States  v.  Ray,  E.  J.,  et  al.  (2  cases)  374 

United  States  v.  Reading  Company  et  al.  (183  Fed.  427,  226  U.  S. 

324,  228  U.   S.  158)    371 

United  States  v.  Reading  Company  et  al.  (Anthracite  Coal  Combina- 
tion)       392 

United  States  v.  Rockefeller,  William,  et  al 395 

United  States  v.  Roebling,  F.  W.,  and  seventeen  others 380 

United  States  v.  Santa  Rita  Mining  Company  and  Santa  Rita  Store 

Company    , 371 


ALPHABETIC  LIST  o?  CASES.  401 

United  States  v.  Sielcken,  Herman,  et  al 386 

United  States  v.  S.  F.  Bowser  &  Company,  Inc.,  et  al 396 

United  States  v.  Simmons,  Chas.  L.,  et  al 373 

United  States  v.  Smith,  Phillip  H.  W.,  and  fourteen  others 380 

United  States  v.  Southern  Pacific  Company,  Central  Pacific  Railway 

Company  et  al 393 

United  States  v.  Southern  Wholesale  Grocers'  Association  376 

United  States  v.  Southern  Wholesale  Grocers'  Association  et  al. 

(207  Fed.  434)  389 

United  States  v.  Standard  Oil  Company  of  N.  J.  et  al.  (152  Fed. 

290,  173  Fed.  177,  221  U.  S.  1)  370 

United  States  v.  Standard  Sanitary  Manufacturing  Company  et  al. 

(187  Fed.  229,  187  Fed.  232,  191  Fed.  172,  226  U.  S.  20)  377 

United  States  v.  Standard  Sanitary  Manufacturing  Company  et  al.  378 

United  States  v.  Standard  Wood  Company  et  al 381 

United  States  v.  Stiefvater,  Joseph,  et  al 374 

United  States  v.  Steers,  John  S.,  et  al.  (192  Fed.  1)  375 

United  States  v.  Sulzberger,  Ferdinand,  doing  business  under  the 

name  of  John   Reardon  &   Sons   Company,   and   Horatio   W. 

Heath,  of  Boston,  doing  business  as  the  Consolidated  Rendering 

Company  377 

United  States  v.  Swift  &  Co.  et  al.  (122  Fed.  529,  196  U.  S.  375)  ...  366 

United  States  v.  Swift,  Louis  F.,  et  al.  (188  Fed.  92)  377 

United  States  v.  Thompson  et  al 392 

United  States  v.  Terminal  Railroad  Association  of  St.  Louis  et  al. 

(197  Fed.  446,  224  U.  S.  383,  226  U.  S.  420,  236  U.  S.  194)  368 

United  States  v.  Terminal  Railroad  Association  of  St.  Louis  et  al.  .  391 
United  States  v.  Trans-Missouri  Freight  Association  (53  Fed.  440, 

58  Fed.  58,  166  U.  S.  290)  363 

United  States  v.  Union  Pacific  Coal  Company  et  al.  (173  Fed.  737)  .  373 
United  States  v.  Union  Pacific  Railroad  Company  et  al.  (188  Fed. 

102,  226  U.  S.  61,  226  U.  S.  470)  373 

United  States  v.  United  Shoe  Machinery  Co.  et  al.  (222  Fed.  349)  . .  382 

United  States  v.  United  Shoe  Machinery  Company  et  al 396 

United  States  v.  United  Shoe  Machinery  Company  of  New  Jersey 

et  al 389 

United  States  v.  United  States  Steel  Corporation  and  others  (223 

Fed.  55)  382 

United  States  v.  Virginia-Carolina  Chemical  Company  et  al.  (163 

Fed.  66)  369 

United  States  v.  Western  Cantaloupe  Exchange  et  al 394 

United  States  v.  White  et  al 391 

United  States  v.  White,  John  P.,  et  al 393 

United  States  v.  Isaac  Whiting  et  al.  (2  cases)  379 

United  States  v.  Winslow,  S.  W.,  et  al.  (195  Fed.  578,  227  U.  S.  202)  381 
United  States  v.  Workingmen's  Amalgamated  Council  of  New  Or- 
leans et  al.  (54  Fed.  994,  57  Fed.  85)  363 


26 


INDEX. 

[REFERENCES  ARE  TO  PAGES.]  PAGE 

ABUSE  OF  CHARTERED  POWERS:    See  ABUSE  OF  CORPO- 
RATE CONTROL. 
subject  considered   108, 109, 110 

ABUSES  OF  CORPORATE  CONTROL: 

comparisons   useful    222 

rule  as  developed  in  patent  and  copyright  cases 222 

rule  in  trade-marks  and  trade  names  222 

natural  divisions  of  topic   222 

unfair  manipulation  and  conduct  in  management  of  and  dealings 

with  corporations   222 

principles  of  fair  dealing  educed  in  corporation  law  223 

definite  rule  of  conduct  established  223 

instances  where  rule  was  applied  223 

rule  applies  where  actual  injury  is  shown  223 

minority  stockholders'  rights  explained  224 

application  is  reasonable  224 

unfair  management  of  corporation  224 

cases  illustrating  rule   224 

standard  of  fair-dealing  maintained 225 

great  variety  of  unfair  means 225 

offices  exclusive  property  of  corporation 225 

manipulation  of  joint  control  226 

redress  through  courts  of  equity 226 

results  not  ideal,  though  often  effectual 226 

Trade  Commission's  jurisdiction  prescribed  by  statute 227 

Trade  Commission  has  power  to  require  reports 227 

Trade  Commission  may  recommend  additional  legislation 227 

corporation  decisions  useful  guide 227 

unfair  restraint  of  voting  power 228 

provisions  of  Section  7  of  Clayton  Bill  promise  beneficial  results  228 

early  unfair  method  of  securing  corporate  control 228 

substitution  of  holding  company  device  228 

ignoring  constitution,  device  excludes  minority  228 

device  apparently  violates  Fifth  Amendment 229 

holding  company  creates  monopoly  of  voting  power 230 

adverse  effects  230 

means  of  relief  indicated 230 

doctrine  of  Northern  Securities  Company  case  opposed  to  hold- 
ing company  plan  230 

403 


404  INDEX. 

[REFERENCES  ARE  TO  PAGES.] 

PAGE 

public  interests  advanced  by  supplemental  Anti-trust  laws 231 

code  of  business  procedure  assured  230 

ACCESS  BY  TRADE  COMMISSION  TO  DOCUMENTARY 
EVIDENCE  OF  CORPORATION:  See  DOCUMENTARY 
EVIDENCE. 

under  what  circumstances  permitted  and  how  enforced 255 

documentary  evidence  defined  248 

ACTS  TO  REGULATE  COMMERCE: 

defined 249 

not  repealed  or  modified  by  Trade  Commission  law 258 

term  "any  common  carrier  subject  to,"  defined 64 

combination  of  manufacture  and  transportation  of  commodities, 

by  common  carrier,  forbidden  by  61 

AFFIDAVIT: 

or  verified  bill  required  to  show  urgent  need  for  relief,  upon  ap- 
plication for  temporary  restraining  order 273 

may  be  filed  in  support  of  application  to  institute  contempt  pro- 
ceedings under  Section  21  of  Clayton  Law 276 

AGENTS: 

criminally  liable  for  corporations'  violations 142, 143, 144,  271 

liable  for  violation  of  Wilson  Law  282 

AGREEMENT: 

in  restraint  of  trade  unlawful  260,  279 

in  restraint  of  import  trade  unlawful  282 

AGRICULTURAL  ORGANIZATIONS  NOT  FOR  PROFIT: 

excepted  from  provisions  of  anti-trust  acts 262 

members  of,  also  excepted 262 

ANSWERS  TO  QUESTIONS  OF  TRADE  COMMISSION: 

to  be  under  oath  if  required 253 

may  be  compelled  by  court  order  256 

criminal  offense  to  refuse  to  make  257 

ANTI-HOLDING  COMPANY  BILL: 

one  of  five  proposed  measures  utilized  by  Congress  when  pre- 
paring Trade  Commission  Act  and  Clayton  Law 138 

ANTI-TRUST  ACTIONS:    See  ANTI-TRUST  LAWS;    DAMAGES 

FOR  VIOLATION  OF  ANTI-TRUST  LAWS. 
semi-public  matters 129 


INDEX.  405 

[REFERENCES  ARE  TO  PAGES.] 

PAGE 

ANTI-TRUST  LAWS:  See  SHERMAN  ANTI-TRUST  LAW;  WIL- 
SON TARIFF  LAW;  CLAYTON  BILL;  also  FOREIGN  ANTI-TRUST 
LAWS;  see  also  DAMAGES  FOR  VIOLATION  OF  ANTI-TRUST 
LAWS. 

defined  in  Trade  Commission  Law  to  include  Sherman  Anti- 
trust Law  and  Sections  73  to  77  as  amended  of  the  Wilson 

Tariff    Law    249 

defined  in  Clayton  Law  to  include : 

Sherman  Anti-Trust  Law 259 

Sections  73  to  77  as  amended  of  the  Wilson  Tariff  Law  and 

the  Clayton  Law  itself 259 

Federal  Trade  Commission  Act  not  included  in  249,259 

not  repealed  or  modified  by  Trade  Commission  Law 149,  258 

liability  under,  not  relieved  by  Trade  Commission's  order 252 

provisions  regulating  foreign  trade  contained  in  Wilson  Tariff 

Law 149,  282 

criminal  provisions  of  Wilson  Tariff  Law  discussed  150 

test  of  constitutionality  of  Anti-trust  laws  stated  21 

protection  by  public  is  end  sought  by 201 

ANTI-TRUST  LAWS  IN  THEIR  RELATION  TO  PATENTS 
AND  COPYRIGHTS:  See  PATENTS  AND  COPYRIGHTS;  TRADE- 
MARKS AND  TRADE  NAMES;  TYING  CLAUSES;  ANTI-TRUST  LAWS; 
ANTI-TRUST  POLICY. 

ANTI-TRUST  POLICY: 

outlined    . . .  _ 7 

legislation  carrying  out,  commended  7 

consists  in  regulating  competition  instead  of  regulating  monop- 
oly       13 

situation  requires  practical  faith  and  mutual  confidence 14 

APPEALS:  See  CIRCUIT  COURT  OF  APPEALS;  SUPREME  COURT;  RE- 
VIEW; CONTEMPT;  RESUBMISSION  TO  COMMISSION. 

Congress  provided  only  limited  review 41 

nature  and  extent  of  review  considered  40, 41 

statute   permits   three   separate   opinions,    with   final    Supreme 

Court   review    41 

no  period  fixed  within  which  party  must  secure  review  of  Com- 
mission's  order    251,  269 

ARTICLE  OF  COMMERCE: 

labor  of  human  being  declared  not  to  be 262 

ASSOCIATIONS:    See  PERSONS;  LABOR;  CORPORATION. 

defined  as  included  within  word  "persons"  281 

Clayton  Law  includes  all,  whether  for  profit  or  not  for  profit  . .  260 

for  profit  only  under  Trade  Commission  Law  248 


406  INDEX. 

[REFERENCES  ARE  TO  PAGES.] 

PAGE 

ATTEMPT  TO  MONOPOLIZE: 

a  misdemeanor 279 

ATTENDANCE  OF  WITNESSES:    See  WITNESSES. 

procedure  of  service  discussed 129 

ATTORNEY  GENERAL: 

to  direct  institution  of  proceedings  under  Sherman,  Wilson  and 

Clayton    Laws 272,  280,  282 

upon  application  of,  Trade  Commission  to  investigate,  etc 253 

upon  application  of  district  courts,  to  issue  writs  of  mandamus 

to  compel  compliance  with  Trade  Commission's  order  134,  256 

to  prosecute  for  recovery  of  forfeitures  258 

Interstate  Commerce  Commission  to  report  violations  of  Clay- 
ton Law  by  common  carriers  to 140, 141,  267 

ATTORNEY'S  FEES: 

recoverable  for  person  injured  under  Sherman,  Clayton  and 
Wilson  Laws,  but  not  under  Trade  Commission  Law  . . .  261,  281,  283 

AUSTRALIA:    See  FOREIGN  ANTI-TRUST  LAWS. 

AUTHORS: 

and  inventors, — exclusive  rights  of,  distinguished  from  monopoly  16, 17 

BAIL: 

in  reasonable  amount,  may  be  required  in  contempt  proceeding 
instituted  under  Section  22  of  Clayton  Law 276,  277 

person  summarily  arrested  in  such  proceeding  shall  be  admitted 
to  bail  in  reasonable  amount  276,  277 

after  conviction,  defendant  in  such  proceeding  shall  be  admitted 
to  bail,  pending  an  appeal 277 

BANKS:    See  CORPORATIONS;    INTERLOCKING  DIRECTORS;    FEDERAL 

RESERVE  BOARD. 
Trade  Commission  has  no  power  to  prevent  banks  from  using 

unfair  methods  of  competition 47,  280 

two-fold  reasons  for  exemption  of,  stated 47 

clerical  error  in  text  of  Trade  Commission  act  noted 249 

Trade  Commission  act  applies  to  banks  in  following  particulars : 
Commission  may  investigate  manner  in  which  decree  against 

banks  in  Anti-trust  proceeding  has  been  or  is  carried  out      253 
upon  the  direction  of  the  President  or  either  house  of  Con- 
gress Commission  may  investigate  and  report  facts  re- 
lating to  any  alleged  violation  of  Anti-trust  laws  by  banks      253 
upon  the  application  of  the  attorney  general  Commission 
may  investigate  and  recommend  readjustment  of  business 
of  banks  violating  Anti-trust  acts  254 


INDEX.  407 

[REFERENCES  ARE  TO  PACES.] 

PAGE 

Commission  may  classify  corporations  254 

Commission   may  investigate   trade  conditions  with   foreign 

countries  affecting  foreign  trade  with  the  United  States  .      254 
class  A  director  of  Federal  Reserve  Bank  may  be  officer  and  di- 
rector of  one  member  bank  265 

mutual  banks  without  shares  of  stock  not  subject  to  interlock- 
ing provisions  264 

ownership  of  stock  in  other  corporations  for  investment  not 

prohibited   263 

by  early  decisions,  banking  not  within  commerce  clause  of  con- 
stitution   47,  48,  49 

power  to  institute  and  control,  contained  in  Section  6  of  con- 
stitution    50,  51 

principal  functions  of  Clayton  Law  respecting 48 

regulation  of,  under  Clayton  Law,  considered 48 

merchandising  transactions  by,  probably  within  scope  of  Clay- 
ton Law  48 

stock  ownership  and  interlocking  directorate  provisions  of  Clay- 
ton Law  probably  apply  to  48, 49 

statutory  exceptions  noted   53 

public  interests  demand  careful  supervision  of 50,  51 

special  regulations  affecting  banking  institutions  50 

intent  of  Congress  to  prevent  centralization  of  control  of 50 

Sections  2,  3,  7,  and  8  of  Clayton  Law  enforced  by  Federal  Re- 
serve Board,  as  to 49,  50,  268 

interlocking  directorates  of,  considered    50,51,52 

occasion  for  regulation  stated  55 

exceptions  to  directorate  regulations,  noted  53 

provisions  applicable  to  dealings  between,  and  common  carriers, 

considered    53,  54,  55,  56 

regulation  or  relations  with  common  carriers  under  Section  10 
of  Clayton  Law  considered  and  occasion  for  requirements 
stated  50,  55,  65,  67,  68,  69, 138, 139,  266 

BIDDING:    See  COMPETITIVE  BIDDING. 

BILL  OF  EXCEPTIONS: 

testimony  may  be  preserved  by,  in  connection  with  appeal  from 
judgment  in  contempt  proceedings  instituted  under  Section 
22  of  Clayton  Law  277 

BOARD:    See  COMMISSION  OR  BOARD. 

BOARD  OF  INQUIRY: 

Federal  Trade  Commission  empowered  to  act  as.  .22,  23,  24,  252,  253, 254 
public  hearings  optional  24 

BOOKS  OF  CORPORATIONS:    See  DOCUMENTARY  EVIDENCE;  COM- 
MISSION, POWERS  OP. 


408  INDEX. 

[REFERENCES  ARE  TO  PAGES.] 

PAGE 
BOYCOTTING:  See  LABOR. 

defined    , 177 

power  of  court  to  enjoin,  limited  82,  83 

in  effect  legalized,  when  in  aid  of  labor  interests  in  trade  dis- 
putes           180 

BRANCH  LINES:    See  COMMON  CARRIERS. 

BRANDEIS,  LOUIS  D.: 

views  of,  on  need  for  regulation  of  competition 13 

BRITISH  TRADES  DISPUTES  ACT: 

quoted    179 

termed  "a  codification  of  the  law  relating  to  peaceful  picketing"      179 

BUREAU  OF  CORPORATIONS: 

abolished    247 

pending  investigations  to  be  continued  by  Trade  Commission  . .  247 

merger  of,  with  Trade  Commission,  discussed  ' 133 

inability  to  require  corporate  reports,  grave  defect  in  original 

authority  conferred  upon  133 

powers  made  effective  under  Trade  Commission  act  136,137 

BUSINESS: 

of  corporation,  correct  entries  and  records  required 257 

BUSINESS— INJURY  TO:  See  DAMAGES  FOR  VIOLATION  OF 
ANTI-TRUST  LAWS. 

BUYER  OR  LESSEE:    See  TYING  CLAUSE. 

tying  agreement,  when  unlawful  260 

CANADIAN  ANTI-TRUST  LAWS:  See  FOREIGN  ANTI-TRUST 
LAWS. 

provisions  of,  considered  83,  84,  85 

apparently  offer  immediate  effective  relief 85 

United  States  and  Canadian  procedure  compared  85 

CAPE  OF  GOOD  HOPE:    See  FOREIGN  ANTI-TRUST  LAWS. 

"CEASE  AND  DESIST"  ORDERS:  See  FEDERAL  TRADE  COM- 
MISSION; INTERSTATE  COMMERCE  COMMISSION;  FEDERAL  RE- 
SERVE BOARD;  CIRCUIT  COURT  OF  APPEALS;  COMMISSION. 

CHARTERED  RIGHTS. 

ripen  into  contract  with  state  18 

modern  grants  reserve  power  to  cancel  or  amend  18 

of  monopoly,  strictly  construed,   18 

CIRCUIT  COURT  OF  APPEALS: 

jurisdiction  of: 

to  enforce  provisions  of  Sections  2,  3,  7,  and  8  of  Clayton 

Law    ..268-269 


INDEX.  409 

[REFERENCES  ARE  TO  PAGES.] 

PAGE 
same  jurisdiction  at  suit  of  party  as  in  suit  by  commission 

for  enforcement  of  Commission's  or  board's  order 251,  270 

may  review  Commission's  or  board's  order  at  suit  of  party 

thereto    251,  270 

statute  fixes  no  limitation  as  to  time  251,  270 

may  order  additional  evidence  to  be  taken  before  the  Com- 
mission or  board  251,  269 

exclusive  jurisdiction  to  enforce,  set  aside  or  modify  Com- 
mission's or  board's  order   252,  270 

decree  of,  subject  to  review  by  Supreme  Court  upon  cer- 

tiorari    251,  269 

no  power  to  relieve  from  liability  under  Anti -trust  laws  .  .252,  270 

expedition  of  hearings  to  be  granted 252,  270 

no  provision   for  taking  testimony  in  court,  except  upon 
application  for  leave  to  adduce  additional  evidence  before 

the  Commission  or  board  251,  269 

procedure  in,  by  Commission  or  board  to  enforce  its  order  . .  .250,  269 
review  of  Commission's  or  board's  order  by  parties  as  follows : 

petition  to  be  filed    251,270 

copy  of  petition  to  be  served  upon  Commission  or  board  .  .251, 270 
Commission  or  board  then  to  serve  and  file  transcript  of 

record 251,  270 

proceedings  to  be  expedited  252, 270 

Commission's  or  board's  findings  of  facts  conclusive  if  sup- 
ported by  testimony  251, 252,  270 

subpoenas  may  run  into  any  other  district  255,  271 

venue : 

in  proceedings  to  enforce  Commission's  or  board's  orders, 
the  circuit  where  violation  is  committed  or  where  person 

accused  resides  or  transacts  business 250,  269 

provisions  as  to  venue  in  suits  against  corporations 271 

CIVIL  SERVICE: 

employees  of  Trade  Commission  subject  to  247 

CLASS  A  DIRECTOR  OF  RESERVE  BANK: 

may  be  officer  and  director  of  one  member  bank 264,265 

CLAYTON  LAW;  also  known  as  SUPPLEMENTARY 
ANTI-TRUST  ACT  or  SUPPLEMENTARY  SHER- 
MAN LAW:  See  COMMISSION  OR  BOARD. 

text   of    259-278 

operates  in  dual  capacity  

comprises  provisions  contained  in  five  proposed  laws 138 

proposed  laws  enumerated   

novel  or  untried   features  not  made  subject  to  criminal  pen- 
alties  138,139,140 

occasion  for  postponement  of  operation  of  novel  or  untried 


410  INDEX. 

[REFERENCES  ARE  TO  PAGES.] 

PACK 
features,  described   131, 132 

limitation,  upon  right  to  pursue  defendants,  contained  in  Sher- 
man Law,  continued  in 107 

offers  regulatory  measures  largely  superseding  criminal  provi- 
sions of  Sherman  Law  147 

compulsative  provisions  of  Clayton  Law  considered  137 

in  pursuance  of  general  right  to  recommend  further  legislation, 
scope  of  provisions  for  enforcement  may  be  enlarged 133 

offenses  against  regulation  of  relations  between  common  carrier 
and  supply,  etc.,  concerns  considered;  and  occasion  for  Sec- 
tion 10  of  Clayton  Law,  stated 138, 139 

provisions  of  Section  10  not  enforcible  by  civil  orders  under 
Section  11  154 

history  and  purpose  of  individual  responsibility  feature  dis- 
cussed   99, 142, 143, 144,  271 

protection  afforded  organized  labor  by  Sections  6  and  20,  con- 
sidered   -. 177 

provisions  separately  examined 178 

CLERICAL  ERROR: 

misplaced  comma  retained  by  mistake  in  Section  5  of  Trade 
Commission  Act 249 

COMBINATION  TO  PREVENT  OR  RESTRAIN  COMPE- 
TITION:   See  MONOPOLY. 

in  restraint  of  import  trade,  unlawful  282 

in  restraint  of  interstate  and  foreign  commerce,  unlawful 279 

labor  etc.,  organization,  not  conducted  for  profit,  shall  not  be 
held  or  construed  to  be  illegal  262 

COMMENDATORY  RULINGS: 

not  permitted  42 

subject  of,  discussed  42 

suggested  in  message  of  President  42 

advocated  in  Congress   43 

argument  in  favor  of,  considered  43, 44 

not  authorized  by  measures,  as  enacted 42 

par.  2  of  Section  20  of  Clayton  Law  suggestive  of 146 

sub-div.  "e,"  Section  9  of  Trade  Commission  Act,  suggests    ....  60 

tendency  toward,  evidenced  by  Section  20  of  Clayton  Law 184 

COMMERCE: 

defined  under  Trade  Commission  Act   248 

defined  under  Clayton  Law   259 

Anti-trust  definitions  of,  compared   92 

limited  to  interstate  and  foreign  commerce 259 

Philippine  Islands  excepted  in  Clayton  Law  259 

"acts  to  regulate"  enumerated  249 


INDEX.  411 

[REFERENCES  ARE  TO  PAGES.] 

FACE 
no  corporation  engaged  in,  shall  acquire  ownership  in  competing 

corporation  262 

specific  provisions  regulating  conduct  of  persons  or  corporations 

engaged  in  commercial  transactions  260,  262,  263 

regulatory  provisions  as  to  corporation  engaged  in  commerce  as 

a  common  carrier  266 

COMMERCE  CLAUSE  OF  CONSTITUTION:    See  CONSTI- 
TUTION. 

decisions  holding  banking  not  within  provisions  of  47 

considered  in  connection  with  early  draft  of  Sherman  Law  .  .77, 78,  79 

applied  in  relation  to  Sherman  Law  79,  80 

narrow  construction  in  Knight  case,  considered 82 

early  debates  in  Congress  on  subject,  discussed 83 

COMMISSION  OR  BOARD— PROVISIONS  COMMON  TO 
FEDERAL  TRADE  COMMISSION,  INTERSTATE 
COMMERCE  COMMISSION  AND  FEDERAL  RE- 
SERVE BOARD:  See  FEDERAL  TRADE  COMMISSION ;  INTER- 
STATE COMMERCE  COMMISSION;  FEDERAL  RESERVE  BOARD; 
PROVISIONS  FOR  ENFORCEMENT. 
powers  and  jurisdiction  of  commissions  and  board: 

to  order  compliance  with  Sections  2,  3,  7,  and  8  of  Clayton 

Law  where  applicable  268 

to  prevent  restraint  of  commerce  or  tendency  to  create 
monopoly  by  stock  ownership  by 

1.  one  corporation  in  a  competing  corporation 262 

2.  one   corporation   in   two   or   more   companies   com- 

peting         262 

to  order  compliance  with  provisions  against   interlocking 
directors  (see  Interlocking  Directors)    268 

to  issue  and  serve  complaint  if  of  the  opinion  law  has  been 
violated 250,  268 

to  hold  hearings  at  least  30  days  after  service  of  com- 
plaint     250,  268 

to  permit  intervention  by  third  persons 250, 268 

to  issue  "cease  and  desist"  orders 250,268 

to  make  findings  of  fact  which  shall  be  conclusive  if  sup- 
ported by  testimony 251,  269 

to   institute   suit   in  circuit   court   of   appeals  to   enforce 
orders    250,  268,  269 

no  power  to  prevent  stock  ownership  for  investment  pur- 
poses          263 

no  power  to  relieve  from  liability  for  violation  of  Anti- 
trust laws    252,270 

no  power  to  prevent  legitimate  formation  of  and  stock 
ownership  in  subsidiary  corporations • 263 


412  INDEX. 

[REFERENCES  ARE  TO  PAGES.] 

PAGE 

has  right  of  access  to  documentary  evidence  of  corporation      255 

means  to  enforce  right  255 

proceedings  before: 

Commission  or  board  to  file  complaint  only  when  it  has  rea- 
son to  believe  law  has  been  violated.  (For  exceptions  see 
heading  "FEDERAL  TRADE  COMMISSION :  Powers 
Peculiar  to")  249,250,268 

hearing  after  30  days  250,  268 

intervention    permitted    250,  268 

report  in  writing  to  be  made  if  Commission  or  board  is 
of  opinion  law  has  been  violated  250,  268 

findings  of  fact  to  be  made  as  part  of  report 250,  268 

Commission  or  board  may  modify  report  or  order  without 
additional  testimony  before  transcript  filed  in  court,  or 
after  additional  hearing  taken  under  court  order  251,269 

Commission  or  board  may  issue  "cease  and  desist"  orders. 250,  268 

Commission  or  board  may  apply  to  circuit  court  of  appeals 
for  enforcement  of  orders  250,  269 

review  of  Commission's  or  board's  order  by  party  in  cir- 
cuit court  of  appeals  251,  270 

must  pass  upon  question  involving  the  exercise  of  its  dis- 
cretionary powers  98 

mandamus  proceedings  would  lie  to  compel  Commission 
or  board  to  act,  in  proper  case 39 

provisions  for  enforcing  Trade  Commission  Act  and  Clay- 
ton Law  37 

history   and   purpose   of   individual    responsibility    feature, 

discussed    142, 143, 144, 145 

regulatory  system  comprised  in  Trade  Commission  statutes 
largely  supersedes  employment  of  criminal  provisions  of 
Sherman  Law  147, 149 

Trade  Commission  exists  to  enforce  Anti-trust  laws  by 
preventing  unfair  methods  148 

by  restraining  or  preventive  measures,  obviates  necessity 
for  criminal  prosecutions  147, 148, 149 

definitions  of  "person"  and  "corporation"  considered 96 

liability  of  individual : 

under  Trade  Commission  Act  97,  98 

under  Clayton  Law   99, 100, 101 

liability  of  corporation: 

under  Trade  Commission  Act  98 

under  Clayton  Law   101, 102, 103 

by  criminal  proceedings  102 

liability  under  Sherman  Law  103-110 

proof  of  direct  damage  to  person  injured  apparently  not 
required  26 


INDEX.  413 

[REFERENCES  ARE  TO  PAGES.] 

PAGE 

limitation  upon  right  to  pursue  defendants,  contained  in 
Sherman  Law,  continued  in  Clayton  Law 107 

COMISSIONERS:     See   FEDERAL   TRADE   COMMISSION;    INTER- 
STATE COMMERCE  COMMISSION. 

COMMODITIES: 

labor  of  human  being  declared  not  to  be  a  commodity 262 

discriminatory  sales  to  different  purchasers  of,  when  unlawful      260 
subject  of  unfair  price  discrimination,  considered,  28,193,194 

COMMON  CARRIERS:     See  INTERLOCKING  DIRECTORS;    INTER- 
STATE COMMERCE  COMMISSION;  COMPETITION. 
Trade  Commission  has  no  power  to  prevent  common  carriers 

from  using  unfair  methods  of  competition  249 

error  in  punctuation  of  Section  5  of  Trade  Commission  Act 

noted 249 

Trade  Commission  law  applies  to  common  carriers  in  following 

particulars : 

Commission  may  investigate  manner  in  which  decree  against 
common  carriers  in  anti-trust  proceeding  has  been  or 

is  being  carried  out  58,  253 

upon  the  direction  of  the  President  or  either  house  of  Con- 
gress Commission  may  investigate  and  report  facts  re- 
lating to  any  alleged  violation  of  Anti-trust  acts  by  com- 
mon carriers  58,  253 

upon  the  application  of  the  attorney  general  Commission 
may  investigate  and  recommend  readjustment  of  business- 
ness  of  common  carriers  alleged  to  be  violating  Anti- 
trust acts  58, 254 

information  so  derived  may  be  made  public,  except  trade 

secrets  and  names  of  customers  254 

Commission  may  classify  corporations  24 

common  carrier  corporations  probably  subject  to  classifica- 
tion by  Trade  Commission  59 

Commission  may  investigate  trade  conditions  with  foreign 

countries  affecting  foreign  trade  with  the  United  States. .      254 
power   to   investigate    foreign   trade    may   have   important 

bearing  upon  common  carrier  interests 60,  61 

provisions  of  Section  6  of  Trade  Commission  Act  not  bur- 
densome to  61 

in  general,  common  carriers  exempted  from  Trade  Com- 
mission Act  provisions  57 

such  exemptions  strictly  construed  57 

Clayton  Law  applies  to  common  carriers  in  following  particu- 
lars: 

elimination  of  competition  by  stock  ownership  prohibited  .      262 
ownership  of  stock  in  competing  corporations  regulated  ...  63,  64 


414  INDEX. 

[REFERENCES  ARE  TO  PAGES.] 

PAGE 

purpose  of  regulating  provisions  discussed  65,  66 

stock  ownership  in  branch  and  construction  lines  permitted      263 

meaning  and  scope  of  term  "subject  to  the  laws  to  regulate 
commerce,"  considered  64 

provisions  applicable  to  dealings  between,  and  banks,  con- 
sidered    53,  54 

occasion  for  regulation  of  dealings  in  securities  of,  stated  .  55,  56 

regulation  of  dealings  with  supply,  etc.,  concerns,  con- 
sidered   53,  55,  65,  66,  67,  138, 139, 140, 141 

interlocking  between  common  carrier  corporations  and  sup- 
ply, financial  or  construction  companies  subjects  their  re- 
lations to  regulation,  under  provisions  of  Clayton  Law  . .  266 

interlocking  of  directors,  etc.,  between  railroad  common 
carriers  not  prohibited  265 

criminal  liability  of  director,  agent,  manager  or  officer 267 

regulations  for  interlocking  with  supply  and  other  com- 
panies, prescribed  " 266,  267 

offenses  against  regulation  of  relations  with  such  companies 
may  be  criminal  267 

general  purpose  and  scope  of  Section  10  of  Clayton  Law, 
regulating  such  dealings  141 

specific  regulations  as  to  competition  in  bidding,  consid- 
ered   140, 141 

Interstate  Commerce  Commission  empowered  to  enforce 
Section  10  of  Clayton  Law  267 

stock  ownership  in  other  corporations  for  investment  not 
prohibited  263 

embezzlement  by  director,  officer  or  manager  of  common 
carrier  a  felony  266 

nature,  extent  and  purpose  of  provision  penalizing  embez- 
zlement, considered  144, 145 

extent  to  which  Sections  2,  3,  7,  and  8  of  Clayton  bill  apply 
to 62 

Sections  2,  3,  7,  and  8  enforced  by  Interstate  Commerce 
Commission,  as  to  62,  268 

methods  of  enforcing  Sections  2,  3,  7,  and  8  of  Clayton  bill, 
compared 62 

injunctive  relief  may  be  granted  against  any  common  car- 
rier for  violation  of  such  provisions  of  Anti-trust  laws  as 
are  not  within  jurisdiction  of  the  Interstate  Commerce 
Commission  272,  273 

COMPETITION:    See  SUBSTANTIAL  LESSENING  OF  COMPETITION. 

definition  of   1 

proper  exercise  of,  right  of 1 

benefits  of  1 

limitations  of  right  to  compete 1,2 


INDEX.  415 

[REFERENCES  ARE  TO  PAGES.] 

FACE 

weaker  party  cannot  always  compete 3 

when  government  intervention  required  3,  4 

English  experience  in  unrestricted  employment  of  labor 2 

American  experience  2 

tendency  of  unrestricted  competition,  shown 2 

unregulated  competition  effectuates  trusts  82 

supervision   of   methods   of   competition   employed   in   general 

business,   desired   5, 6 

business  interests  demand  restraint  of  destructive  competition  .  4 

new  administrative  measures  required  4 

demand  is  general   5 

National  Commercial  Conference  convened  6 

investigation  by  Senate  Committee  on  Interstate  Commerce  ...  6 
policy  of  regulating  competition  instead  of  restraining  monop- 
oly, instituted   7, 13 

policy  outlined   7 

remarks  of  President  upon  need  to  regulate 7,  8 

problems  involved  in  regulation  of  8 

esteemed  dominant  force  in  business  12 

manifold  forms  of  unfair  methods  of,  indicated 9,218,225 

views  of  leading  authorities  on  necessity  for  regulation  of  ...  9-13 

remarks  on  field  for  Commission  13 

Commission  laws  supplement  Sherman  Law  field  105 

price  not  sole  criterion  of  success  of  competition  13,14 

substantial  lessening  of  competition  by  tying  contracts  de- 
clared unlawful 260 

elimination  of,  by  price  discrimination  unlawful  260 

tying  clause  contracts,  etc.,  unlawful  260 

labor    excepted    262 

control  of,  by  stock  ownership,  regulated  and  forbidden 262 

preservation  of,  by  regulation  of  stock  ownership,  considered  .  63 
elimination  of,  by  interlocking  directors  in  corporations  other 

than  banks  and  common  carriers,  prohibited 265 

regulations  concerning  supply,  construction  and  financial  con- 
cerns with  common  carriers  through  interlocking  directors  .  .266,  267 

purpose  of  requiring,  in  transportation  business,  discussed 65,66 

power  to  prevent  elimination  of,  vested  in  Federal  Trade  Com- 
mission, Interstate  Commerce  Commission  and  Federal  Re- 
serve Board  268 

power  to  prevent  vested  in  attorney  general  and  U.  S.  attorneys  272 

price  discrimination,  unlawful  260 

unfair  methods  of,  unlawful  249 

Trade  Commission  has  power  to  prevent  unfair  methods  of  ...  249 

COMPETITIVE  BIDDING:    See  COMPETITION;  COMMON  CARRIERS. 
statutory  provisions  require,  in  specified  dealings  between  com- 
mon carriers  and  construction  concerns,  etc 266,267 

regulative  provisions  called  for  in  public  interest 88, 89 


416  INDEX. 

[REFERENCES  ARE  TO  PAGES.] 

PAGE 
COMPLAINTS:    See  FEDERAL  TRADE  COMMISSION;    COMMISSION 

OR  BOARD. 

to  be  filed  by  Trade  Commission  250 

when  it  has  reason  to  believe  any  provision  of  Sections  2,  3, 

7,  and  8  of  Clayton  Law  have  been  violated,  filing  required  . .      268 
filed  only  when  violation  is  shown 24,  25,  26 

CONDEMNATION  OF  PROPERTY: 

used  or  owned  in  violation  of  Sherman  and  Wilson  Laws  280,  281,  283 

CONGRESS: 

either  house  may  direct  Trade  Commission  to  investigate  al- 
leged violations  of  the  Anti-trust  laws  253 

report  of  Trade  Commission  as  to  foreign  trade,  submitted  to, 
with  recommendations  254 

reports  annual  or  special  made  to,  by  Trade  Commission,  with 
recommendations  for  additional  legislation  • 254 

investigation  of  need  for  preventive  and  remedial  legislation, 
by  Senate  committee  under  resolution  of  July  26,  1911  6 

CONDITIONAL  CONTRACTS:    See  TYING  CLAUSE. 
CONSPIRACY: 

in  restraint  of  interstate  and  foreign  trade,  unlawful 279,  280 

in  restraint  of  import  trade,  unlawful  282 

to  monopolize,  unlawful  279 

CONSTITUTION:     See  COMMERCE  CLAUSE  OP  CONSTITUTION; 
IMMUNITY. 

text  of  provisions  applicable  to  Anti-trust  laws  and  proceed- 
ings   286,  287 

Constitutionality  of  drafts  of  Sherman  Anti-trust  Law  consid- 
ered   75,  76,  77 

right  of  State  under,  to  limit  individual  rights,  stated 81 

narrow  construction  of  commerce  clause  in  Knight  case,  consid- 
ered   82 

when  instituting  Trade  Commission,  Congress  adopts  broad 
construction  83 

Section  6  of,  empowers  Congress  to  institute  and  control  bank- 
ing institutions  51 

amendments  which  provide  immunity  rights 156, 159 

Fourth  Amendment  guarantees  against  unreasonable  searches 
and  seizures  159 

Fifth  Amendment  guarantees  against  self-incrimination   152 

does  not  apply  to  corporations  155 

CONSTITUTIONALITY:    See  CONSTITUTION. 

test  of,  concerning  Anti-trust  statutes,  stated 21 


INDEX.  417 

[REFERENCES  ARE  TO  PAGES.] 

PAGE 
CONSTRUCTION: 

rule  of,  applicable  when  construing  Sherman  Law  as  criminal 

statute    149 

narrow  construction  of  "commerce"  in  Knight  case,  considered  82 
when  instituting  Trade  Commission  Congress  adopts  broad  con- 
struction     83 

argument  advocating  narrow  construction  of  Sections  1  and  2 

of  Sherman  Law,  examined  88-92 

Supreme  Court  adopts  broad  construction  91 

of  statutes,  proper  method  stated  49 

CONSTRUCTION  COMPANIES: 

regulation  of  relations  with  common  carriers  under  Section  10 
of  Clayton  Law,  considered,  and  occasion  for  requirements 
stated  65-69,  86-89,  138,  139, 140 

CONTEMPT  OF  COURT:    See  DISTRICT  COURT. 

crimes  form  basis  for  contempt  proceedings  275 

violations  of  orders  entered  in  suits  by  United  States  constitute      277 

proceedings  in   276 

jury  trial  permitted  276 

contempt  proceedings  reviewable  277 

release  upon  reasonable  bail  pending  appeal,  provided 277 

provisions  of  act  not  applicable  where  contempt  was  committed 
in  presence  of  court  or  in  suit  by  the  United  States,  or  is  not 

a  crime   277,  278 

scope  of  proceeding  in,  under  Sections  21  to  24  of  Clayton 

Law   102, 103 

nature  of,   described    106, 120-123, 146 

proceeding  extends  to  infractions  of  Sherman  Law 106 

statute  of  limitations  in  contempt  proceedings,  one  year 278 

contempt  proceedings  not  a  bar  to  criminal  prosecutions 278 

for  failure  to  obey  order  of  court  requiring  testimony,  etc.  . . .-.      256 

CONTRACTS  IN  RESTRAINT  OF  TRADE,  ILLEGAL:  See 

COMPETITION. 

parties  thereto  guilty  of  misdemeanor  279,280 

in  restraint  of  import  trade,  unlawful  282 

exclusive    tying    contracts,    unlawful    when    they    substantially 

lessen  competition  or  tend  to  create  a  monopoly 260,  261 

CONTUMACY,  OR  REFUSAL  TO  OBEY  SUBPCENA: 

district  court  may  issue  compelling  order,  and  enforce  same  by 
contempt  proceeding  256 

refusal  to  obey  subpoena  or  produce  documentary  evidence,  con- 
stitutes criminal  offense  257,  258 

COPYRIGHTS:    See  PATENTS  AND  COPYRIGHTS. 
27 


418  INDEX. 

[REFERENCES  ARE  TO  PAGES.] 

PAGE 
CORPORATE  LIABILITY:    See  LIABILITY. 

CORPORATE  RECORDS:    See  CORPORATIONS;   CRIMES. 

Commission  has  access  to,  for  purposes  of  Trade  Commission 

Act 252,  253,  255 

falsification,  etc.,  of  a  criminal  offense  135,  257,  258 

CORPORATIONS:     See   COMMON   CARRIERS;    BANKS;    INTER- 
LOCKING DIRECTORS;  ABUSES  of  CORPORATE  CONTROL. 
definition  of: 

in  Trade  Commission  Law  means  company  or  association 
for  profit  incorporated  or  unincorporated  with  or  with- 
out capital  shares,  except  partnerships 248 

in  Clayton  Law  included  with  associations  under  word  per- 
sons    260 

in  Sherman  Law  included  with  associations  under   word 

persons   • 281 

statutory  definitions  of,  considered   96, 97 

Congress  does  not  concern  itself  with  the  legal  fiction,  when 

dealing    with    159, 160 

service  upon  officer  of  252 

inquisitorial  powers  of  Trade  Commission  as  to : 

Commission  may  investigate   252,  253 

may  be  required  by  Commission  to  file  reports  and  answer 

questions    253 

Commission  may  investigate  manner  in  which  corporation 

is  carrying  out  court  decree  253 

Commission   may  investigate  any   violation   of   Anti-trust 

laws  by  corporation  253 

Commission  may  investigate  and  recommend  readjustment 

of  business  of  corporation  254 

Commission  may  classify  corporations  254 

inquisitorial  powers  under  Section  6  of  Trade  Commission  act 

extend  only  to  99 

documentary  evidence  of  corporation  subject  to  examination 

by  Trade  Commission   255 

penalties  for  falsifying  records,  etc 257,  258 

penalties  for  failure  to  file  reports  258 

banks  and  common   carriers  excepted   from  Trade   Commis- 
sion's power  under  Section  5  249 

error  in  punctuation  of  Section  5,  noted  249 

stock  ownership   by  one  corporation   in   another   unlawful   in 

certain  cases  262,  263 

right  to  own  capital  stock  of  another  corporation  for  invest- 
ment only  not  prohibited  263 

ownership  of  the  stock  of  subsidiary  corporations  permitted  . . .       263 
stock  ownership  in  branch  line  by  common  carriers  permitted  .      263 


INDEX. 

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PAGE 

interlocking  directors  prohibited  between  competing  corpora- 
tions (other  than  railroad  common  carriers  and  banks)  if 
one  has  capital  and  surplus  of  more  than  one  million  dollars  265 
director,  officer  or  employee  eligible  at  time  of  election  not 
ineligible  until  one  year  from  date  of  election  or  employ- 
ment   265,  266 

venue  in  suits  against: 

where  the  violation  is   committed,  or  where  corporation 

accused  resides  or  carries  on  business  269 

in  district  where  corporation  is  an  inhabitant  or  where  it 

may  be  found  or  transacts  business 271 

criminal  acts  of,  deemed  also  criminal  acts  of  individual,  direc- 
tors, officers  and  agents   271 

history  and  purpose  of  individual  responsibility  discussed 142 

for  general  consideration  of  individual  responsibility  feature, 

see    138-144 

corporations  not  included  within  scope  of  immunity  provisions  155, 257 

abuses  of  corporate  control  222 

unfair  manipulation  and  management  222 

unfair  exercise  of  voting  power  228 

COSTS  AND  DAMAGES:    See  INJUNCTION. 

security  conditioned  upon  the  payment  of,  required  upon  is- 
suance of  injunctive  order  274 

COURTS:    See  CIRCUIT  COURT  OF  APPEALS ;  DISTRICT  COURT;  SU- 
PREME COURT;  DECREE  OF  COURT. 

may  adopt  or  reject  an  advisory  suggestion  of  the  Commission  254,  255 
application  to  courts,  manner  and  character  fixed  .250,  251,  268,  269,  270 
application  to,   to  enforce  Commission's  orders  against  a  re- 
calcitrant     250,  269 

application  to,  to  have  order  Commission  set  aside  251,270 

appropriate  court  obtains  jurisdiction    250,  251,  269,  270 

Trade  Commission  may  investigate  carrying  out  of  final  de- 
crees issued  by,  in  Anti-trust  suits  253 

may  grant  leave  to  adduce  evidence 251,  269 

Circuit  Court  of  Appeal's  judgment  and  order  final,  except  upon 

discretionary  review  by  Supreme  Court  251,  269 

jurisdiction 252,  256,  266,  269,  270,  272 

have  concurrent  jurisdiction  to  enforce  Sections  2,  3,  7,  and  8 

of  Clayton  Law  272 

judgment  may  be  reviewed  in  discretion  by  Supreme  Court  ..251,269 

order  admissible  as  evidence  

order  does  not  relieve  from  liability  under  Anti-trust  acts  252,  258,  270 

may  refer  an  inquiry  to  Commission  254,  255 

duty  of,  to  review  Trade  Commission's  construction  of  term 
"unfair   competition" 250' 251 


42O  INDEX. 

[REFERENCES  ARE  TO  PAGES.] 

PAGE 
COURTS  OF  EQUITY: 

will  not  enforce  contracts  against  public  policy  20 

COURT  OR  ENQUIRING  BODY:    See  COURTS;   IMMUNITY. 
cannot  confer  immunity,  except  when  exercising  jurisdictional 
powers    157, 158 

COURT  REVIEW:    See  APPEALS. 

character  of    251,  269, 271 

findings  of  Commission  binding  upon  court  251,  269 

question  of  law,  as  distinguished  from  question  of  fact,  open  to 

examination    251,  269 

questions  of  sufficiency  of  proof  and  of  proper  construction  of 
statutes  and  of  Trade  Commission's  jurisdictional  powers 
raised  upon  review  of  Commission's  order  251,269 

CRIMES:    See  PENALTIES;  CONTEMPT  OF  COURT. 

criminal  provisions  of  Anti-trust  laws  considered 131 

nature  of  Trade  Commission  Act  and  Clayton  Law  civil  rather 

than  criminal   131, 132, 133 

occasion  for  omission  of  criminal  measures  for  enforcement  of 

certain  provisions  of  Clayton  Law,  stated  137 

novel  or  untried  features  subject  to  civil  penalties  only 132,137 

violations  of  Sections  2,  3,  7,  and  8  are  civil  offenses 138 

penalties  under  Trade  Commission  Act  (as  under  Clayton  Law) 

are  cumulative   136,  252,  258,  270 

in  general,  intent  is  controling  element  in  criminal  trials 18, 19 

immunity  granted  to  witnesses  testifying  under  subpoena 257 

failure  to  attend  or  testify,  an  offense  134,  257 

wilfully  making  false  entry  or  report,  or  wilful  failure  to 
make  true  entry,  or  wilful  removal  or  alteration  of  docu- 
mentary evidence,  or  wilful  refusal  to  submit  same  for  ex- 
amination, an  offense  257,  258 

occasion  for  penalizing  falsification,  etc.,  of  corporate  records, 

set    forth    135, 136 

failure  to  file  report  by  corporation  subject  to  penalty 258 

officer  or  employee  of  Commission  making  public  information 

without  authority,  guilty  of  a  misdemeanor  136,  258 

embezzlement  by  officer,  director  or  manager  of  common  car- 
rier a  felony  144,  266 

nature,  extent  and  purpose  of  provision  considered 144, 145, 146 

offenses  against  regulation  of  relations  between  common  car- 
riers and  supply,  financial  or  construction  companies,  crim- 
inal   267 

general  purpose  and  scope  of  Section  10  of  Clayton  Law 141 

wilful  disobedience  of  any  order,  etc.,  a  contempt 275 

contempt  proceedings  not  bar  to  prosecutions  for  criminal  of- 
fense  123,  276 


INDEX.  421 

[REFERENCES  ARE  TO  PAGES.] 

PAGE 
officers,   directors  and  agents  criminally  liable   for  corporate 

crimes    271 

history  and  purpose  of  individual  responsibility  feature  dis- 
cussed   142-146 

director,  agent,  manager  or  officer  of  common  carrier  liable 

criminally 267 

occasion  for  prohibitory  provision  contained  in  Section  10  of 

Clayton  Law,  discussed  138-142 

generally  as  to  regulation  of  relations  between  common  car- 
riers and  supply,  etc.,  concerns  138-146 

specific  common  carrier  regulations  considered  140,141 

criminal  provisions  of  Sherman  Law  discussed 146,147,148,149 

Sherman  Law  declared  to  be  a  criminal  statute  149 

creates  a  new  offense  by  penalizing  acts  not  criminal  under 

the  common  law  149 

punishment  prescribed  in  Sherman  Law  146, 149 

rule   applicable   when   construing   Sherman   Law   as  criminal 

statute  149 

criminal  jurisdiction  of  Sherman  Law  extended  by  Clayton  Law      106 
by   preventive   and    restraining   measures,   Trade   Commission 

obviates  criminal  prosecutions  147, 148, 143 

Contempt  proceedings  specified  in  Sections  21  to  25  of  Clayton 

Law,  non-criminal    146 

crimes  under  Wilson  Tariff  Law  relate  solely  to  import  trade  .      131 
Wilson   Tariff  Law  contains   re-enactment   of  Sherman  Law 

Anti-trust  provisions  150 

provides  Anti-trust  regulation  of  import  trade 149 

essential  feature,  contained  in  Section  73  thereof,  not  passed 

upon  by  courts    150 

Section  6  of  Trade  Commission  act  confers  authority  for 
recommending  enlargement  of  penal  provisions,  if  required  to 
make  effective  Anti-trust  laws  133 

CRIMINAL  INTENT: 

in  general,  is  controlling  element  in  criminal  trials 18, 19 

CUSTOMERS: 

names  of,  not  to  be  divulged  by  Trade  Commission  254 

may  be  selected  when  not  in  restraint  of  trade  260 

DAMAGES  FOR  VIOLATION  OF  ANTI-TRUST  LAWS: 

three-fold  recoverable  by  injured  persons  with  costs  and  at- 
torney's fee  261,  281,  283 

right  to  recover  three-fold  damages  extended  by  Clayton  Law..       108 

venue  of  actions  for   128,  271 

no  provision  as  to  damages  in  Trade  Commission  Act 125, 126 

generally,  as  to  right  to  bring  actions 124 


422  INDEX. 

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PAGE 

right  covers  all  violations  of  Anti-trust  laws 125 

Sherman  Law  provision  for  triple  damages  re-enacted 126 

extent  of  actionable  injuries  enlarged  127 

liability  for  damages  accruing  under  "unfair  methods"  de- 
clared illegal  by  Trade  Commission  act,  considered 125, 126 

presents  question  for  Supreme  Court  126 

definition  of  "person"  in  Clayton  Law  127 

right  to  litigate  before  alleged  violation  has  been  adjudged 

illegal  by  the  Trade  Commission,  considered   127, 128 

final  decrees  in  proceedings  by  government,  prima  facie  evidence      128 

provision  as  to  venue  128, 129 

procedure  of  service  discussed  129 

service  of  subpoenas   129 

attendance  of  witnesses,  considered  129, 130 

Anti-trust  actions  semi-public  matters  129, 130 

DEALERS  IN  SECURITIES  AND  SUPPLIES:    See  BANKS; 
COMPETITION;   COMPETITIVE  BIDDING;   COMMON  CARRIERS. 

regulation  of  relations  with  common  carriers  under  Section 
10  of  Clayton  bill  considered,  and  occasion  for  require- 
ments stated  53,  54,  55,  65,  66,  67,  138,  139, 140,  266,  267 

DEBATES  IN  CONGRESS:    See  SHERMAN  LAW. 

Summary  of,  connected  with  passage  of  Sherman  Law 74,75,76 

committees'  report,  containing  substance  of,  upon  proposed 

supplementary  Anti-trust  laws,  session  of  1911-12  304 

tentative  forms  of  Sherman  Law  submitted  to  the  Senate  for 

the  fifty-first  session  of  Congress  297 

DECREE  OF  COURT:    See  COMMISSION  OR  BOARD. 

Commission  may  act  as  master  in  chancery  to  report  form  of 
court  decree  in  proceedings  by  the  United  States  under  Anti- 
trust acts 254' 

in  suits  by  United  States,  shall  be  prima  facie  evidence  against 
defendant  in  other  suits,  except  consent  decrees,  etc 261 

Trade  Commission  may  investigate  manner  of  carrying  out  . . .       253 

DEFENDANT  PARTY: 

appeal  to  court  from  Commission's  orders  251,  252,  270 

service  of  process  on  252 

rights  of,  court  review  deals  with  251,  269 

statute  fixes  no  time  limit  for  appeal  from  Commission's 
order  251,  252,  B70 

DEFENSE: 

violation  of  Sherman  Law  riot  a  defense  to  suit  for  infringe- 
ment of  patent  rights  190 


INDEX.  423 

[REFERENCES  ARE  TO  PAGES.] 

PACE 

DEFINITIONS    OF   TERMS:     See  TERMS,   DEFINITIONS   OF; 
DEFINITIONS. 

DEFINITIONS:    See  TERMS,  DEFINITIONS  OF. 

acts  to  regulate  commerce   249 

Anti-trust  laws  (see  Anti-trust  Laws)   249,  259 

associations    (see   Associations)    281 

commerce   (see  Commerce)    259 

Anti-trust  definitions  of  commerce,  compared  92,  93 

corporations  (see  Corporations)    248,  259,  281 

documentary  evidence  (see  Documentary  Evidence)  248 

partnerships : 

excepted  from  definition  of  corporations  248 

subject  to  Section  5  Trade  Commission  Law  249 

person  or  persons  (see  Person  or  Persons)  260,  281 

person,  in  Clayton  Law  127 

person,  in  Anti-trust  laws  96, 106, 115, 116 

corporation  in  Anti-trust  laws   96 

definitions    compared    96, 97 

monopoly,  defined  by  Senate  committee 76 

monopoly,  judicially  defined  15 

competition,   judicially   defined    1 

embezzlement,  Section  9,  Clayton  Law  144, 266 

Federal  Trade  Commission  defined  as  "a  commercial  police"  . .      132 

strike  172 

boycott    177 

good  will   207 

exclusive  rights 17 

DEPOSITIONS: 

testimony  may  be  taken  by  deposition 256 

manner  of  taking  depositions  256 

compelling  attendance  of  witnesses,  etc 256 

forms  of    241 

DIRECT  DAMAGE  TO  THE  PERSON  INJURED: 

proof  of,  apparently  not  required 

DIRECTORS:    See  BANKS;   INTERLOCKING  DIRECTORS;    COMMON 
CARRIERS  ;   CORPORATIONS. 

with  officers  and  agents,   are  personally  liable   for  corporate 

crimes  in  which  they  participate  142, 143, 144, 27 

embezzlement  of  property  of  common  carrier  by,  a  felony 266 

nature,  extent  and  purpose  of  provision,  discussed 144, 145, 146 


424  INDEX. 

[REFERENCES  ARE  TO  PAGES.] 

PAGE 

DIRECTORS,  OFFICERS  AND  AGENTS  OF  CORPORA- 
TION CONSENTING  TO  VIOLATION  OF  PENAL 
PROVISIONS  OF  ANTI-TRUST  LAWS:     See  DIREC- 
TORS;  ANTI-TRUST  LAWS;   CRIMES. 
are  individually  guilty  of  misdemeanor  271 

DISCRETION:  See  COMMISSION  OR  BOARD;  FEDERAL  TRADE 
COMMISSION. 

right  of  Commission  to  exercise  as  to  instituting  of  proceed- 
ings under  Section  5  of  Trade  Commission  act 39 

under  provisions  of  Section  11  of  Clayton  Law,  the  person  ag- 
grieved is  in  effect  the  moving  party  39 

mandamus  to  compel  Commission  or  board  to  exercise  its 39 

DISCRIMINATION  IN  PRICE: 

unlawful  when  effect  may  be  to  substantially  lessen  competi- 
tion or  tend  to  create  monopoly  260 

permitted  when  on  account  of  differences  in  grade,  quality  or 
quantity  sold,  or  because  of  difference  in  cost  of  selling  or 
transportation,  or  when  made  to  meet  competition  260 

persons  may  select  their  own  customers  when  not  in  restraint 
of  trade  260 

decision  in  first  Clayton  Law  case,  passes  upon  question  of  .28, 193, 194 

DISTRICT  ATTORNEYS  OF  UNITED  STATES:     See  IN- 
JUNCTION. 
duty,  under  direction  of  attorney  general  to  enforce  Sections 

2,  3,  7,  and  8,  and  other  provisions  of  Clayton  Law 272 

may  conduct  contempt  proceedings 276 

DISTRICT  COURTS  OF  UNITED  STATES:     See  INJUNC- 
TION. 
jurisdiction   to   restrain   violations   of   Clayton,    Sherman    and 

Wilson  Laws    272,  280,  282 

may  require  other  parties  summoned   272,  280,  283 

crimes  form  basis  for  contempt  proceedings  275 

violations  of  orders  entered  in  suits  by   United   States  basis 

for  contempt  proceedings  under  Clayton  Law 277,  278 

procedure  in  contempt  cases  276,  277 

may  refer  suit  by  government  to  Federal  Trade  Commission 

as  master  in  chancery  to  report  form  of  decree 254,  255 

may  enforce  Trade  Commission  Act  by  mandamus 256 

may  punish  by  contempt  failure  to  obey  order  requiring  testi- 
mony, etc 256 

venue  of  private  actions  for  violations  of  Sherman  Law 281 

of  Clayton  law   261 

DISTRICT   OF  COLUMBIA,  COURT  OF: 

wilful  disobedience  of  any  order,  etc.,  a  contempt  275 


INDEX.  425 

[REFERENCES  ARE  TO  PAGES.] 

FACE 
DOCUMENTARY  EVIDENCE:    See  EVIDENCE. 

defined  to  include  all  papers,  etc.,  in  existence  at  time  and  after 
passage  of  Trade  Commission  Act  248 

Commission  shall  have  access  to  documentary  evidence  of  cor- 
poration being  investigated  or  proceeded  against 255 

production  of,  may  be  compelled 255 

EDMUNDS,  SENATOR: 

argument  in  opposition  to  amendment  exempting  labor  from 
provisions  of  Sherman  Law  166,167 

ELIGIBILITY  OF  INTERLOCKING  DIRECTORS,  OFFI- 
CERS OR  EMPLOYEES:    See  INTERLOCKING  DIRECTORS. 

EMBEZZLEMENT:    See  CRIMES. 

statutory    definition    266 

subject  discussed    144 

such  misappropriation  of  property  of  common  carrier  by  presi- 
dent, director,  officer  or  manager,  is  a  felony 144 

nature,  extent  and  purpose  of  provision,  considered 144,145,146 

EMPLOYEES:    See   INTERLOCKING    DIRECTORS;    BANKS;     COM- 
MON CARRIERS  ;   CORPORATIONS  ;   CRIMES. 

EMPLOYEES  AND  EMPLOYERS:    See  LABOR. 

ENFORCEMENT:    See  PROVISIONS  FOR  ENFORCEMENT. 

necessity  for  and  means  of  37,  38 

procedure  described  • . . .        39 

means  of  review  40,  41 

methods  of  procedure  stated  and  compared  44 

EQUITY  SUIT: 

Trade  Commission  may  act  as  master  in  chancery  in 254,  255 

any  person  may  apply  for  injunctive  relief,  where  violation  of 
Anti-trust  laws  is  alleged 272 

ERROR: 

in  Section  5,  Trade  Commission  act  249 

EVIDENCE:    See  DOCUMENTARY  EVIDENCE;    PRIMA  FACIE  Evi- 
DENCE. 

Commission's  findings  of  facts  conclusive  if  supported  by  testi- 
mony,   251,269 

additional  evidence  may  be  ordered  by  court  to  be  taken  be- 
fore Commission  251>  269 

Commission  may  require  attendance  of  witnesses  and  produc- 
tion of  documentary  evidence  (Query— has  Federal  Reserve 
Board  such  power  as  to  enforcement  of  Trade  Commission 
or  Clayton  Law?),— see  statutory  provisions 255,256 


426  INDEX. 

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PAGE 

may  be  ordered  taken  by  deposition  (see  Forms)   256 

final  decree  of  court  in  suit  by  United  States  prima  facie  evi- 
dence against  defendant  in  other  suits 102,  261 

testimony  must  be  taken  before  Commission  or  board 250,  268 

query — whether  court  may  hear  testimony  as  to  necessity  for 

adducing  additional  evidence  before  Commission  or  board  ..251,  269 
must  be  reduced  to  writing 250,  268 

EXAMINERS: 

may  prosecute  inquiry  in  any  part  of  United  States 248 

EXCLUSIVE  RIGHTS  OF  INVENTORS  AND  AUTHORS: 

See  PATENTS  AND  COPYRIGHTS. 
exclusive  rights  as  distinguished  from  monopolies  15, 16 

EXEMPTION    FROM    PROVISIONS    OF    ANTI-TRUST 
LAWS: 

agricultural,  horticultural  and  labor  organizations  and  mem- 
bers thereof  262 

exemptions  from  provisions  of  curative  statutes  strictly  con- 
strued    57 

EXPEDITION  IN  THE  CIRCUIT  COURT  OF  APPEALS: 

See  APPEALS;   REVIEW;   RESUBMISSION  TO  COMMISSION. 

granted  to  all  Commission  cases   45,  252,  270 

text  of  expediting  Act  of  1910  302,  303 

EXPORT  AND  IMPORT  TRADE:    See  FOREIGN  TRADE. 
FALSE  TESTIMONY,  REPORTS,  ETC.: 

punishable  by  fine  and  imprisonment   257 

importance  of  accuracy  in  reports,  etc.,  shown  135, 136 

FARMERS  EXEMPT: 

farmers  exempt  from  provisions  of  Anti-trust  laws 262 

FEDERAL  RESERVE  BANK: 

Class  A  director  of  Federal  Reserve  Board  may  be  officer  and 
director  in  one  member  bank  264,  265 

FEDERAL  RESERVE  BOARD:    See  COMMISSION  OR  BOARD. 

for  names  of  members  of  Board,  see 235 

powers  peculiar  to: 

to  enforce  provisions  of  Clayton  Law  applicable  to  banks..       268 

FEDERAL    TRADE    COMMISSION:       See   COMMISSION    OR 
BOARD. 

for  names  of  members  of  Commission,  see 232 

for  text  of  Federal  Trade  Commission  Act,  see 259-278 

definition  of  terms  "person"  and  "corporation"  96 


INDEX.  427 

[REFERENCES  ARE  TO  PAGES.] 

PACE 

not  intent  of  Congress  to  institute  a  legislative  body 26,  27 

creation  of: 

composed  of  five  commissioners  246 

appointed  by  the  President  246 

nonpartisan   246 

term  of  office  seven  years  246 

chairman  chosen  by  commissioners  246 

in  general : 

official  seal  shall  be  judicially  noticed  246 

causes  of  removal  of  commissioners   246 

may  employ  attorneys,  experts,  etc.  247 

commissioner's  salary  $10,000  246 

employees  under  civil  service  (except  secretary,  commis- 
sioners' clerks,  special  experts  and  examiners)  247 

principal  office  in  Washington  248 

may  meet  and  exercise  powers  any  place 248 

necessary  expenses  provided  for 246,  247 

one  or  more  commissioners  or  an  examiner  may  prosecute 

inquiry  any  place  in  U.  S 248 

powers  and  duties  grouped  under  five  heads : 

advisory  powers  of  (Trade  Commission  Act,  Sec.  6,  pars,  f 

and  h)    254 

powers  and  duties,  investigatory   (Trade  Commission  Act, 

Sec.  6,  par.  g,  and  Sec.  9)    254,  255,  256,  257 

powers  and  duties,  power  of  publicity  (Trade  Commission 

Act,  Sec.  6,  par.  f )  254 

powers  and  duties,  powers  to  establish  procedure  (Trade 
Commission  Act,  Sec.  6,  par.  g,  subject  to  the  statutory 
provisions  establishing  general  methods  of  procedure, 
as  set  forth  in  identical  terms  in  Sec.  5  of  act,  and  in  Sec. 

11  of  Clayton  Law)    • 254 

powers  and  duties,  semi-judicial  (Trade  Commission  Act, 
Sec.  5 ;  Sec.  3,  par.  3 ;  Sec.  9,  pars.  1  and  5 ;  Sec.  10)  ... 

248,  249,  255,  256,  257,  258 

powers  to  sit  as  judicial  body,  analyzed  and  compared 26 

powers  peculiar  to: 

to  prevent  price  discrimination  (certain  price  discrimina- 
tions being  permitted)  26° 

to  prevent  unlawful  tying  clause  contracts  (such  as  con- 
tracts of  lease  or  sale  binding  lessee  or  purchaser  not 
to  use  goods  of  competitor  or  sellor  or  lessor,  if  such 
contract  substantially  lessens  competition  or  tends  to 

create  monopoly)    260>  261 

to  conduct  proceedings  now  pending  before  Bureau  of 
Corporations  2"^ 


428  INDEX. 

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PAGE 

to  file  complaint  only  if  of  opinion  unfair  methods  of  com-; 
petition  have  been  used  and  that  the  proceeding  would 

be  "to  the  interest  of  the  public"  250 

person,  partnership  or  corporation  complained  of  may  show 
cause  why  order  should  not  be  entered 250,  268 

to  prevent  persons,  partnerships  or  corporations,  except 
banks  and  common  carriers  from  using  unfair  methods 
of  competition  249 

right  to  exercise  visitorial  powers  over  business  and  rec- 
ords of  corporations  99,  252,  253,  255 

to  investigate  corporations  other  than  banks  and  common 

carriers  252,  253,  254 

visitorial  powers  under  Section  6  of  Act  extend  only  to 
corporations  99 

to  require  annual  or  special  reports  and  answers  to  ques- 
tions   : 253 

to  investigate  the  manner  in  which  decree  against  any  cor- 
poration has  been  or  is  being  carried  out  253 

under  direction  of  President  or  either  House  of  Congress 
to  investigate  and  report  alleged  violations  of  Anti-trust 
acts  by  corporation  253,  254 

upon  application  of  attorney  general  to  recommend  read- 
justment of  business  of  corporation  254 

to  publish  information  except  trade  secrets  and  names 
of  customers  254 

to  make  annual  and  special  reports  and  recommendations 
to  Congress  and  publish  its  reports  254 

to  classify  corporations  and  make  rules  and  regulations  . . .       254 

to  investigate  trade  conditions  with  foreign  countries 254 

to  investigate  and  make  recommendations  to  Congress  con- 
cerning manufacturers,  merchants'  or  traders'  relations 
with  foreign  trade  254 

to  act  as  master  in  chancery  in  proceedings  by  govern- 
ment under  Anti-trust  laws  254,  255 

to  have  access  to  all  papers,  etc.,  in  the  possession  of  other 
departments  and  bureaus  of  the  government 255 

to  administer  oaths,  examine  witnesses  and  receive  evi- 
dence    255 

to  take  testimony  in  person  or  by  examiners 248,  255 

to  subpoena  witnesses  and  production  of  documentary  evi- 
dence from  any  place  in  the  United  States  to  any  place 
of  hearing  255 

district  courts  may  enforce  attendance,  etc.,  by  contempt 
proceedings  or  by  mandamus  256 

to  order  testimony  taken  by  deposition  (see  Forms)   256 


INDEX.  429 

- 

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PAGE 

to  examine  and  copy  documentary  evidence  of  corpora- 
tions           255 

liability  of  individual: 

under  Trade  Commission  Act   97 

under  Clayton  Law  99 

liability  of  corporation : 

under  Trade  Commission  Act  98 

under  Clayton  Law  101 

penalties  prescribed  in  Act,  and  under  Clayton  Law  are  cumu- 
lative     136,  258 

mandamus  proceedings  will  lie  to  compel  Commission  to  exer- 
cise its  discretionary  powers  39 

provisions  for  enforcing  Trade  Commission  Act  37 

FEDERAL  TRADE  COMMISSION  ACT:  See  FEDERAL  TRADE 
COMMISSION;   COMMISSION  OR  BOARD. 

text  of   259-278 

consideration  of  penal  provisions  pertaining  to 134-137 

FEDERAL   TRADE   COMMISSION'S    FUNCTIONS:     See 

FEDERAL  TRADE  COMMISSION;    COMMISSION  OR  BOARD. 

for  names  of  members  of  Commission,  see  232 

as  a  board  of  inquiry  23,  24 

as  a  judicial  body  24,  25 

FELONY:    See  CRIMES. 

embezzlement  by  a  common  carrier  officer  a 266 

FINAL    DECREE    AGAINST    DEFENDANT    CORPORA- 
TION:   See  FEDERAL  TRADE  COMMISSION. 

when  violation  of  Anti-trust  acts  are  concerned,  Trade  Com- 
mission has  power  to  investigate  manner  in  which  decree  is 
being  carried  out  252,  253 

FINDINGS  OF  FACT  BY  COMMISSION  OR  BOARD: 

conclusive  if  supported  by  testimony  251, 269 

FINES: 

penalty  prescribed  for  failure  to  give  testimony  or  produce  doc- 
uments    257 

penalty  for  withholding  or  falsifying  corporate  records 257 

penalty  for  failure  to  file  reports 258 

FISH,  FREDERICK  P.: 

views  of,  on  need  for  regulation  of  competition 11 

FOREIGN  ANTI-TRUST  LAWS: 

Canada   84 

Great  Britain   86 

Cape  of  Good  Hope  86 


43°  INDEX. 

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PAGE 
Japan 86 

Australia    86 

New  Zealand  86 

FOREIGN  TRADE: 

both  export  and  import  trade  subject  to  Sherman,  Clayton  and 

Trade  Commission  laws  248,  259,  279 

import  trade  only,  subject  to  Wilson  Tariff  Law 282 

Philippine  Islands,  not  subject  to  Clayton  Law 259 

Trade  Commission  has  power  to  investigate  foreign  trade  con- 
ditions    254 

effects  of  right  of  Trade  Commission  to  investigate 60,  61 

FORFEIT: 

failure  by  corporation  to  file  report  subjects  it  to  $100  per  day  .      258 
FORMS: 

No.  1.  Petition  for  Issuance  of  Complaint  236 

No.  2.  Answer  to  Complaint  237 

No.  8.  Affidavit  of  Service  237,238 

No.  4.  Petition  for  Permission  to  Intervene  238 

No.  5.  Subpoena  239 

No.  6.  Subpoena  Duces  Tecum 239, 240 

No.  7.  Verified  Application  for  Subpoena  Duces  Tecum 240 

No.  8.  Application  for  Order  Requiring  Testimony  to  be  Taken 

by  Deposition 241,  242 

No.  9.  Directions  for  Taking  Testimony  by  Deposition  in  a 

Contested  Proceeding   242,  243 

FUNCTIONS  OF  FEDERAL  TRADE  COMMISSION:    See 

COMMISSION  OR  BOARD;    FEDERAL  TRADE  COMMISSION;    FED- 
ERAL TRADE  COMMISSION'S  FUNCTIONS. 

FRANCHISE: 

ripens  into  contract  with  state  18 

modern  franchises  reserve  power  to  cancel  or  amend 18 

GOVERNMENT  RECORDS: 

available  to  Trade  Commission,  upon  direction  by  President  . .      255 

GREAT  BRITAIN:    See  FOREIGN  ANTI-TRUST  LAWS. 

GUILTY  KNOWLEDGE:    See  OFFICERS. 

joined  with  participation  in  crime  of  corporation,  renders  direc- 
tors, officers  and  agents  liable  to  prosecution  for  misde- 
meanor    271 

HABEAS  CORPUS:    See  WITNESSES ;  IMMUNITY. 

release  on,  of  witness  who  refuses  to  answer  questions 164 


INDEX.  431 

[REFERENCES  ARE  TO  PAGES.] 

PACE 

HEARINGS:    See  COMMISSIONER  OR  BOARD. 

notice  of,  by  Commission  250,  268 

place  and  time  of  hearing  fixed  thirty  days  after  service  of 

complaint   . 250,  268 

record  of,  filed  in  Circuit  Court  of  Appeals 250,  251, 269 

further  hearings  by  Commission  permitted  251, 269 

HORTICULTURAL  ORGANIZATIONS,  NOT  FOR  PROFIT: 

excepted  from  provisions  of  Anti-trust  acts;    members  of,  also 
excepted  262 

ILLEGAL  COMBINATION: 

labor,  etc.,  organization  shall  not  be  held  or  construed  to  be  ...      262 
IMMUNITY:    See  WITNESSES. 

granted  to  witnesses,  testifying  under  subpoena  257 

no  immunity  for  perjury  257 

not  granted  by  any  order  of  Commission  or  board,  or  judgment 

or  decree  of  Circuit  Court  of  Appeals  153,  252,  270 

based  upon  rights  conferred  by  constitution  152 

corporation,  not  entitled  to 155, 159,  257 

purpose  of  immunity  provisions  stated  155 

actual  jeopardy  must  be  shown  to  confer  156, 157, 161 

witness  must  claim,  in  order  to  secure  157 

government  entitled  to  know  attitude  of  witness  as  to  claiming 

privilege    of 157 

court  or  body  acting  within  jurisdictional  powers  alone  can 

confer   157, 158 

testimony  must  be  in  proceeding  relevant  and  material  to  exer- 
cise of  such  powers  157,  158 

further  consideration  of  provisions  relating  to  158 

provisions  in  act  of  February  25,  1903  158 

text  of  immunity  statutes 289,  290 

by  pardon    158 

power  to  exclude  from,  inclusive  of  state  incorporated  bodies  . .      159 

Fourth  Amendment,  as  it  relates  to  159, 160 

conferred  in  aid  of  prosecution 160, 161 

does  not  extend  to  future  acts 161 

resistance  by  witness,  not  required 161, 162 

exemption  in  federal  courts  does  not  protect  from  State  court 

prosecutions    156 

statute  narrows  right  to  secure   162 

fair  dealing  seems  to  require  broad  construction  of  privilege  . .      162 
policy  granting  complete  immunity  would  benefit  Anti-trust  in- 
vestigations    

rulings  in  immunity  cases   

witness  occupies  dangerous  position   

immateriality  not  a  question  for  witness  to  decide 163, 164 


432  INDEX. 

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PACE 

specific  rulings  considered  164 

relates  to  criminal  procedure  only  152 

immunity  proceeds  from  recognition  of  constitutional  rights  . . . 

152,  159,  160 

freedom  to  contract  a  qualified  right 151 

immunity  provisions  stated  153 

Commission's  orders  not  equivalent  to  subpoena 153 

IMPORT  AND  EXPORT  TRADE:    See  FOREIGN  TRADE. 

IMPRISONMENT:    See  CRIMES. 

as  punishment  for  violation  of  provisions  of  the  Clayton  Law 

266,  267,  271,  276,  277 

INDIVIDUAL  LIABILITY   OR  RESPONSIBILITY:     See 

LIABILITY. 

INJUNCTION: 

importance  of  subject  considered  Ill 

right  to  relief  by,  retained  and  enlarged  Ill,  112 

notice  which  equity  courts  require  112, 113 

development  and  establishment  of  practice  112, 113 

any  person  or  corporation  threatened  with  damage  by  violation 

of  Anti-trust  laws  entitled  to  injunction  272 

practice  revised : 

regulations  under  Clayton  Law  113, 114, 115 

relief  by,  under  Clayton  Law : 

general  features,  considered  115, 116 

application  and  hearing   

requirements  as  to  notice  117, 118 

security  118 

orders  must  be  specific  118, 119 

special  limitations,  in  trade  disputes 119,  120 

report  of  Senate  committee  relating  to  (note)   120 

injunctive  relief  not  authorized  by  Clayton  Law,  against  common 

carrier  in  certain  cases  272,  273 

no  preliminary  injunction  without  notice  273 

no  temporary  restraining  order  without  notice  unless  imme- 
diate irreparable  injury  shown  273 

party  enjoined  may  move  dissolution  of  temporary  restraining 

order  upon  two  days'  notice 273 

injunction  bond  required  274 

order  of  injunction  shall  be  specific  274 

binding  only  upon  parties  and  those  receiving  actual  notice 274 

injunctions  not  permitted  between  employers  and  employees, 
or  between  employees,  or  between  persons  employed  and  per- 
sons seeking  employment,  unless  necessary  to  prevent  an  irre- 
parable injury  and  no  such  injunction  shall  prohibit  terminat- 


INDEX.  433 

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PAGE 

ing  the  employment  or  peacefully  persuading  others  to  do  so  274,275 

court  may  issue,  to  restrain  violation  272,  280,  282,  283 

public  interests  conserved  under  Trade  Commisssion  Act  ...114,115 
restraining  orders  (not  injunctions)  issued  under  said  Act  ...114, 115 
no  preliminary  injunctive  relief  provided  for  under  Trade  Com- 
mission Act   114 

INJUNCTIVE  RELIEF:    See  INJUNCTION. 

INJURIES  TO  BUSINESS  OR  PROPERTY  FROM  VIOLA- 
TIONS OF  ANTI-TRUST  LAWS:  See  DAMAGES  FOR 
VIOLATION  OF  ANTI-TRUST  LAWS. 

compensated  by  threefold  damages,  costs  and  attorney's 

fees  261,  281,  283 

no  provision  as  to  recovery  of  damages  in  Trade  Commission 
Act  125, 126 

INQUISITORIAL  POWERS:    See  FEDERAL  TRADE  COMMISSION. 

INTER-CORPORATE  SHAREHOLDING:  See  STOCK  OWN- 
ERSHIP BY  ONE  CORPORATION  IN  ANOTHER. 

INTERLOCKING  DIRECTORS: 

prohibited  after  two  years  as  follows: 
as  to  banks : 

interlocking  officers,  directors  or  employees  in  national 
banks  if  either  one  has  deposits,  capital,  surplus  and 
undivided  profits  of  more  than  five  million  dollars  . .  264 

private  banker  or  director  of  state  bank  having  more 
than  five  million  of  deposits,  capital,  surplus  and 
undivided  profits  not  eligible  as  director  in  any  na- 
tional bank  264 

provisions  for  determining  the  five  million  dollar  lim- 
itation above  mentioned  264 

a  national  bank  in  city  of  more  than  200,000  popula- 
tion may  have  as  a  director,  officer  or  employee  any 
director,  officer  or  employee  of  not  more  than  one 
other  national  or  state  bank  in  the  same  place,  only 
where  the  entire  capital  stock  of  one  of  such  banks 
is  owned  by  the  stockholders  in  the  other,  but  may 
not  have  as  officer,  director  or  employee  any  private 
banker  located  in  the  same  place 264,  265 

query:  whether  this  provision  is  subject  to  the  five 
million  dollar  limitation  above  mentioned  264,265 

mutual  banks  without  shares  of  capital  stock  not  sub- 
ject to  interlocking  provisions  264,  265 

class  "A"  director  of  federal  reserve  bank  may  be 
officer  or  director  or  both  in  one  member  bank 265 

director,  officer  or  employee  eligible  at  time  of  election 


434  INDEX. 

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PAGE 

does  not  become  subject  to  interlocking  provisions 
until  one  year  from  date  of  election  or  employment  .      265 
as  to  common  carriers: 

no  provisions  against  interlocking  in  railroads  .35,65,266,267 
interlocking  between  common  carrier  and  supply,  con- 
struction or  financial  concern  subjects  transactions 
between  them  to  regulation  by  the  Interstate  Com- 
merce  Commission    266,  267 

as  to  corporations  other  than  banks  and  railroad  common 

carriers : 

interlocking  directors  prohibited  after  two  years  in  two 
or  more  corporations  any  one  of  which  has  capi- 
tal, surplus  and  undivided  profits  aggregating  more 
than  one  million  dollars,  if  such  companies  be  com- 
petitors so  that  elimination  of  competition  by  agree- 
ment would  violate  Anti-trust  laws 265 

director  eligible  at  time  of  election  not  subject  to  in- 
terlocking provisions  until  one  year  from  date  of 

election    265 

provisions  for  regulation  of  interlocking  directors,  considered 
generally   50-56 

INTERLOCKING  DIRECTORATES  BILL: 

one  of  five  proposed  measures  utilized  by  Congress  when  pre- 
paring Trade  Commission  Act  and  Clayton  Law 138 

INTERSTATE  COMMERCE  ACTS:    See  ACTS  TO  REGULATE 

COMMERCE. 

INTERSTATE  COMMERCE  COMMISSION:     See  COMMIS- 
SION OR  BOARD;   COMPETITIVE  BIDDING;   COMPETITION. 

for  names  of  members  of  Commission,  see  235 

powers  peculiar  to,  under  authority  conferred  by  Section  11  of 

Clayton  Law: 

may  determine  legality  of  branch  line  construction  or  ac- 
quisition through  stock  ownership  263 

may  regulate  relations  between  common  carriers  and  sup- 
ply, construction  or  financial  concerns  with  interlocking 

directors    266,  267 

to  report  to  attorney  general  violations  by  common  car- 
riers of  Section  10  of  Clayton  Law 267 

may   enter   cease   and   desist   orders   to   prevent   unlawful 

stock  ownership  by  common  carriers   268 

no  authority  to  prevent  interlocking  of  directors,  etc.,  as 

between  common  carriers  265 

empowered  to  enforce  Section  10  of  Clayton  bill 69 

empowered  to  enforce  Sections  2,  3,  7,  and  8  of  Clayton  Law 
as  to  common  carriers  61,  62,  268 


INDEX.  435 

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PAGE 

uncertainty  as  to  whether  provision  of  Section  7  conferring 
right  to  form  subsidiary  corporations,  includes  common  car- 
riers, noted  63,  64 

organization  and  procedure  of,  followed,  so  far  as  practicable, 

in  formation  of  Federal  Trade  Commission  77, 133 

for  text  of  original  Interstate  Commerce  act,  see  Appendix  "O"      345 

INTERSTATE  TRADE  COMMISSION  BILL: 

one  of  five  proposed  measures  utilized  by  Congress  when  pre- 
paring Federal  Trade  Commission  Act  and  Clayton  Law  ..  138 

INTERVENTION: 

permitted  by  Commission  or  board  on  good  cause  shown  (see 

Forms)    250,  268 

INVALIDITY  OF  A  PORTION  OF  CLAYTON  ACT: 

shall  not  invalidate  any  other  portion 278 

INVENTORS: 

and  authors,  exclusive  rights  of  distinguished  from  monopoly  .        17 

INVESTIGATION:  See  INTERLOCKING  DIRECTORS;  COMMON  CAR- 
RIERS. 

by  Interstate  Commerce  Commission,  into  alleged  violation  of 
provision  as  to  competitive  bidding  267 

INVESTIGATION  BY  TRADE  COMMISSION:     See  COM- 
MISSION. 
INVESTMENT  IN  STOCK  BY  CORPORATION: 

not  prohibited,  when  for  investment  only 263 

JAPAN:    See  FOREIGN  ANTI -TRUST  LAWS. 

JEOPARDY: 

actual,  must  be  shown  to  afford  immunity 156 

JUDGMENT  OF  COURT  IN  SUITS  BY  UNITED  STATES: 
prima  facie  evidence  against  defendants  in  other  suits,  except 

consent  decrees,  etc 102i  261 

for  memoranda  of  Anti-trust  cases  instituted  by  the  United 

States,  (complete  to  October  15,  1915),— see  Appendix  "P"  ..      362 

JUDICIARY:    See  JUDICIAL  BODY;  JUDICIAL  CODE. 
JUDICIAL  BODY:    See  COURTS;   COURTS  OF  EQUITY;   COURT  OR 
ENQUIRING  BODY;    COMMISSION  OR  BOARD;    FEDERAL  TRADE 
COMMISSION;  APPEALS. 

Trade  Commission  empowered  to  act  as 22,  23,  24 

judicial  powers  of  Trade  Commission  analysed  and  compared  .  26,  27 

JUDICIAL  CODE:    See  REVIEW;  REVIEW  OF  ORDERS ;  APPEALS. 

Section  263  repealed  by  Clayton  Law 113.  274 


436  INDEX. 

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PAGE 

Section  266  not  amended  274 

right  of  review  by  the  Supreme  Court  upon  certiorari  under 

Section  240  of,  specifically  provided   251,269 

JURISDICTION:  See  CIRCUIT  COURT  OF  APPEALS;  COMMISSION 
OR  BOARD  ;  DISTRICT  COURT  ;  SUPREME  COURT  ;  FEDERAL  TRADE 
COMMISSION;  INTERSTATE  COMMERCE  COMMISSION;  FEDERAL 
RESERVE  BOARD. 

KNIGHT  CASE: 

narrow  construction  of  "commerce"  in,  overruled  82 

when  instituting  Trade  Commission,  Congress  adopted  and  ap- 
plied broad  construction  of  power  to  regulate  commerce 83 

KNOWLEDGE:    See  GUILTY  KNOWLEDGE. 

LABOR: 

labor  not  a  commodity  or  article  of  commerce -. 262 

labor  organizations  not  for  profit  excluded  from  provisions  of 

Anti-trust   acts    262 

injunctions  not  permitted  between  employers  and  employees, 
or  between  employees,  or  between  persons  employed  and  per- 
sons seeking  employment,  unless  necessary  to  prevent  an  irre- 
parable injury  and  no  such  injunction  shall  prohibit  terminat- 
ing the  employment  or  peacefully  persuading  others  to  do  so  274,  275 
members  of  labor  organizations  not  for  profit,  excluded  from 

provisions  of  Anti-trust  acts   262 

subject  considered  in  connection  with  inception  of  Sherman 

Law   165, 166 

exemption  from  requirements  of  Sherman  Law,  advocated  and 

discussed  at  period  of  enactment  165, 166 

argument  of  Senator  Edmunds  in  opposition  to  exemption  ...166,167 

argument   prevails    167, 168 

exclusion  of  labor-exempting  provision   167, 168 

argument   criticised    168 

defect  in  argument  noted  168 

Congress  should  encourage  lawful  organized  labor  169 

combinations  of  workmen  for  their  own  reasonable  protection, 
as  such,  excepted  from  criminal  provisions  of  Canadian  Anti- 
trust Law  (note)  169 

equality  of  corporation  and  organized  labor,  noted  169 

a  leading  decision  quoted   170, 171 

contrasting  sentiments  compared   171 

trades'  unions  operate  by  distinctive  methods  171, 172 

"strike" — usual  means  of  compulsion   172 

"strike"  defined  172 

right  to  refuse  to  deal 172-177 

"boycott"  defined  and  considered  177 


INDEX.  437 

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PAGE 
extent  of  rights  conferred  upon  organized  labor  under  Clayton 

Law  177 

provisions  of  Clayton  Law  separately  examined  178 

restrictive  regulations  applicable  to  injunctive  orders 178 

right  to  strike  recognized 178, 179 

peaceful  picketing  legitimatized  179, 180 

peaceful  promoting  of  strikers'  interests  permitted 179, 180 

British  Trades'  Disputes  act,  quoted  179 

policy  indicated  and  embodied  in  Clayton  Law,  best  supported 

by  reason  179 

unlawful  act  in  disobedience  of  court's  order,  subjects  offender 

to  contempt  proceedings  180 

boycott  in  aid  of  cause  legalized  180, 181 

right  to  withdraw  patronage 180, 181 

labor  organizations  may  assert  every  lawful  right  181,182 

labor  organizations  may  grant  financial  aid  182, 183 

strike  benefit  fund  is  private  property  182, 183 

Congress  overrules  opposing  decision  182 

rulings  cited  182 

right  to  peaceably  assemble  established  183, 184 

existence  of  dispute  does  not  illegalize  otherwise  lawful  act  ..183,184 

supporting  decision  cited  183, 184 

rights  of  labor  confirmed  184 

general  policy  declared 184 

LABOR  ORGANIZATIONS:    See  LABOR. 

LEASE:    See  TYING  CLAUSE. 

based  upon  tying  contract,  unlawful  when  it  substantially  les- 
sens trade,  or  tends  to  create  monopoly 260 

LEGISLATIVE  BODY: 

Trade  Commission  not  intended  by  Congress  to  constitute 69 

LEGISLATIVE  STANDARD  ESTABLISHED: 

"that  unfair  methods  of  competition  in  commerce  are  hereby 
declared   unlawful"    249 

LESSEE  OR  BUYER:    See  TYING  CLAUSE. 

nature  of  unlawful  agreement  entered  into  with,  considered  . .  .188, 189 

LESSENING  OF  COMPETITION:    See  COMPETITION;    SUB- 
STANTIAL LESSENING  OF  COMPETITION. 

LIABILITY:    See  CONTEMPT  OF  COURT. 

individual : 

under  Trade  Commission  Act 97,  98 

under,  Clayton  Law  

under  Sherman  Law  104-108 


438  INDEX. 

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PAGE 
corporate : 

under  Trade  Commission  Act  98,  99 

under  Clayton  Law  101 

under  Sherman  Law  108, 109, 110 

scope  of,  enlarged  under  Clayton  Law 119 

limitations  of  earlier  doctrine  removed  by  provisions  of  Clay- 
ton Law  110, 119 

for  damages  accruing  under  "unfair  methods"  illegalized  by 

Trade  Commission  Act,  considered  125, 126 

presents  question  for  Supreme  Court  126 

for  actionable  injuries  under  Sherman  Law,  extended  ...126,127,128 
under  Anti-trust  laws,  not  relieved  by  order  of  Commission 

or  board    252,  270 

corporations   (not  individuals)   subject  to  visitorial  powers  of 

Commission  under  Section  6  of  Act 98,  99 

to  action  for  damages  before  alleged  violation  has  been  ad- 
judged illegal  by  Trade  Commission,  considered 127, 128 

later  amendment  may  confirm  such  tentative  right 128 

LIABILITY  UNDER  ANTI-TRUST  LAWS:    See  LIABILITY. 

not  relieved  by  Commission's  orders  252,  270 

LIMITATIONS,  STATUTE  OF: 

running  of  statute  of  limitations  as  to  private  rights  suspended 

during  pendency  of  proceeding  by  United  States 128,261,262 

statutory  limitation,  in  contempt,  one  year  123,278 

LIMITATION    UPON    INDIVIDUAL    INITIATIVE    IN 
ANTI-TRUST  SUITS: 

removed  by  provisions  of  Clayton  Law  107-110 

LUMBER: 

not  included  in  prohibition  of  transportation  by  common  carriers 
of  goods  in  which  they  retain  interest  61 

MANAGER: 

embezzlement  of  property  of  common  carrier  by,  a  felony 266 

nature,  extent  and  purpose  of  provision,  considered 144 

MANDAMUS:    See  DISTRICT  COURTS. 

proceedings  by,  authorized  only  under  Trade  Commission  Act  .102,  103 
right  of  attorney  general  to  apply  for,  at  request  of  Trade  Com- 
mission           134 

proceeding  will  lie,  at  instance  of  person  injured,  to  compel 
Commission  or  board  to  pass  upon  question  within  its  dis- 
cretionary powers  39 

MANDATORY  ORDER:    See  DISTRICT  COURT. 

authorized,  to  secure  access  by  Trade  Commission  to  docu- 


INDEX.  439 

[REFERENCES  ARE  TO  PAGES.] 

PACE 

mentary  evidence  of  corporation  under  examination;  also,  to 
compel  obedience  to  Commission's  subpoena  256 

MANUFACTURERS: 

Trade  Commission  has  power  to  investigate  and  make  recom- 
mendations to  Congress  concerning  foreign  trade,  in  connec- 
tion with  combinations  by  manufacturers,  etc 254 

MASTER  IN  CHANCERY: 

Commission  may  be  appointed  by  district  court  as  master  in 
chancery  to  report  form  of  decree 254,  255 

MEMBERS    OF   LABOR,   AGRICULTURAL    OR   HORTI- 
CULTURAL ORGANIZATIONS: 

not  subject  to  act  262 

MEMBERSHIP  OF  COMMISSION  OR  BOARD: 

Federal  Trade  Commission  232 

Interstate  Commerce  Commission    235 

Federal  Reserve  Board  235 

MERCHANTS: 

Trade  Commission  has  power  to  investigate  and  make  recom- 
mendations to  Congress  concerning  foreign  trade  254 

MISAPPLICATION    OF    MONEYS,    FUNDS,    CREDITS, 

ETC.,  OF  COMMON  CARRIER:    See  CRIMES. 
by  its  president,  director,  officer  or  manager,  is  embezzlement  . .      266 
MISDEMEANOR:    See  CRIMES. 

violation  of  regulation  prescribed  for  common  carrier  by  Sec- 
tion 10  of  Clayton  Law  is  267 

violation  of  any  penal  provision  of  the  Anti-trust  laws  deemed 

offense  of  consenting  individual  director,  etc 271 

false  entries  in  corporation  records  257,  258 

false  statements  in  reports  to  Commission  257, 258 

for  officer  or  employee  of  Commission  to  make  public  informa- 
tion obtained 258 

refusal  to  testify  in  response  to  subpoena  257 

refusal  to  submit  evidence  257,  258 

removal  of  documentary  evidence  from  jurisdiction  of  United 

States      257,  258 

MONOPOLY:    See  COMBINATION  TO  PREVENT  OR  RESTRAIN  COM- 
PETITION; TRUSTS. 

denned    15, 76 

acts  declared  unlawful,  when  constituting  a  260,261,262,279,282 

distinguished  from  exclusive  rights  of  inventors  and  authors  . . 

16,  17,  186,  187,  222 

exclusive  rights  of  inventors  and  authors  considered  200,201 


440  INDEX. 

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PACE 

Anti-trust  laws  govern  method  of  selling  copyrighted  articles  . .  197 

public  benefit  is  ultimate  object  of  exclusive  rights 197 

rights  of  author  and  patentee  distinguished  197 

development  of  anti-monopoly  sentiment  15, 16 

doctrine  of  Darcy  v.  Allen  adopted  16 

terms, — exclusive  rights,  and  monopolies, — not  identical   16, 17 

distinction  noted   16, 17 

test  of  fitness  not  a  17, 18 

strict  construction  is  applied  to  chartered  rights  of 18 

when  franchise  ripens  into  exclusive  contract  18 

unregulated  condition  of  competition  frequent  source  of 18 

public  injury  effectuated  by  obnoxious  18 

rate  or  price  fixing  agreements  fall  within  general  prohibition  . .  20 
Anti-trust  laws,  especially  criminal  provisions,  adequate  to  sup- 
press      19 

commerce  impaired  or  destroyed  by  restraint  of  trade  or 19 

banks  and  common  carriers  not  within  jurisdiction  of  Trade 

Commission    20 

the  defense  of,  is  not  a  bar  to  enforcement  of  collateral  or  in- 
dependent contracts   20 

but  State  laws  may  authorize  such  defense  (note)  20 

construction  of  Federal  Trade  Commission  laws  may  change 

prior    rulings    21 

contracts  of,  not  enforcible  when  against  public  policy 20 

equity  courts  apply  similar  ruling   20,  21, 198 

collateral  or  independent  contracts,  however,  may  be  enforced  .  20 

statutory  provisions  may  make  defense  general  (note)   20 

test  of  constitutionality  of  Anti-trust  statutes  stated  21 

constitutionality  of  new  legislation  seems  assured  21 

Federal  regulation  of  monopoly  limited  to  interstate  trade  and 

commerce 21 

whether  conducted  by  combination  or  individual,  prohibited  ..105-106 

MORAWETZ,  VICTOR: 

views  of,  on  need  for  regulation  of  competition  10 

MUTUAL  BANKS: 

provisions  against  interlocking  do  not  apply  to  mutual  savings 

banks  without  shares  of  capital  stock  264 

NAMES:  See  MEMBERSHIP  OF  COMMISSION  OR  BOARD. 
NEW  ZEALAND:  See  FOREIGN  ANTI-TRUST  LAWS. 
OFFENSES:  See  CRIMES. 

OFFICERS:       See     INTERLOCKING     DIRECTORS;      CORPORATIONS; 
BANKS;   COMMON  CARRIERS;  CRIMES. 

criminal  liability  of  common  carriers'  officers  267 

embezzlement  of  property  of  common  carrier  by,  a  felony  ....  266 


INDEX.  441 

[REFERENCES  ARE  TO  PAGES.] 

FACE 

nature,  extent  and  purpose  of  provision  considered 144,145,146 

criminal  liability  of  corporations'  officers,  directors  and 

agents  142, 143, 144, 271 

for  discussion  of  similar  provision  in  its  application  to  officers 

of  common  carrier,  see   65, 66 

ORDERS   OF   COMMISSION   OR   BOARD:       See  FEDERAL 
TRADE    COMMISSION;    INTERSTATE   COMMERCE    COMMISSION; 
FEDERAL  RESERVE  BOARD;   INTERLOCKING  DIRECTORS. 
general  provisions: 

no  provision  of  statute  as  to  effective  date  of  "cease  and 

desist"  orders  against  unfair  methods  of  competition  . .      250 
all  other  orders  referred  to  must  state  the  manner  in  which 
compliance  with  the  order  shall  be  carried  out  and  the 

time  therefor   268 

Circuit  Court  of  Appeals  has  exclusive  jurisdiction  to  af- 
firm,  modify  or   set   aside,   at  suit   of   Commission   or 

board  or  any  party  252,  270 

no  order  of  Commission  or  board  or  judgment  of  court  to 
enforce  the  same  shall  relieve  any  person  from  liability 

under  Anti-trust  laws  252,270 

person,    partnership    or   corporation   complained    of    may 

show  cause  why  order  should  not  be  entered 250,  268 

Commission  or  board  may  modify  "cease  and  desist"  orders 
until  record  is  filed  in  Circuit  Court  of  Appeals 250, 268,  269 

ORDERS  TO  CEASE  AND  DESIST:    See  ORDERS  OF  COMMIS- 
SION OR  BOARD. 
procedure  upon  applications  for,  described  39,40,41,250,268 

ORGANIZED  LABOR:    See  LABOR. 

Senate  debate  upon  original  Anti-trust  law  included  discussion 
of  exemption  of  organized  labor  166 

PARTNERSHIPS:    See  PERSONS. 

subject  to  Section  5  of  Trade  Commission  Law  249 

when  excluded  from  definition  of  corporation  in  Trade  Com- 
mission   Act    248 

PATENTS  AND  COPYRIGHTS:  See  TRADE-MARKS  AND  TRADE 
NAMES;  TYING  CLAUSE;  ANTI-TRUST  LAWS;  ANTI-TRUST 
POLICY. 

distinction  between  exclusive  rights  and  monopolies  16, 17 

distinction  between  right  to  exclude  and  right  to  sell 194, 195 

Anti-trust  laws  in  their  relationship  to   185 

origin  and  purpose  of  exclusive  grants  to  inventors  and  au- 
thors          185 

power  of  Congress  to  grant,  is  conferred  by  constitution 185 


442  INDEX. 

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PAGE 

early  action  by  Congress   185 

relative  extent  of  these  exclusive  grants  186 

public  interest  is  ultimate  object   186 

scope  of  exclusive  rights  under  patent  laws  187 

decision  defines  extent  of  patentee's  rights  187 

occasion  for  and  legislative  intent  embodied  in  Section  3  of 

Clayton  Law,  described  and  discussed  189 

inventor  entitled  to  select  his  source  of  profit 189 

said  right  of  selection  considered  in  connection  with  Section  3 

of  Clayton  Law 189, 190 

violation  of  Sherman  Law  not  a  defense  to  infringement  suit  . .       190 

enlarging  patent  rights  by  combination,  prohibited  191 

agreeing  to  suppress  invention,  not  permitted 191, 192 

requiring  vendee  to  maintain  the  continuing  re-sale  price  of 

patented  article,  not  within  scope  of  grant 192 

remarks  upon  decision  in  "Cream  of  Wheat"  case 193, 194 

initial  Clayton  Law  decision  recognizes  right  of  dealer  to  pro- 
tect trade  193 

anti-discrimination  (Section  3)  construed 194 

argument  opposed  to  above-mentioned  construction  of  Sec- 
tion 3,  stated  (note)  194 

combinations  by  patentees,  subject  to  Anti -trust  laws  194 

right  to  exclude  distinct  from  right  to  sell 195, 196 

medical  compounds  196 

secret  concoctions  not  favored   196 

extent  of  exclusive  rights  fixed 196 

copyright  laws  as  construed  under  Anti-trust  laws  196 

source  of  power  ,. 196 

great  benefit  derived  196, 197 

distinction  noted   197 

rights  of  author  and  patentee  distinguished  197 

Anti-trust  laws  govern  method  of  selling  copyrighted  articles  .197, 198 
infractors  of   Anti-trust  laws  not  entitled  to   enforce  trade- 
restraining  agreements,  in  equity  courts  198 

violation  of  printed  notice  not  an  infringement  198 

retaining  title  in  property,  owner  preserves  right  to  fix  prices  .       199 

comparison  of  privileges  under  patent  and  copyright  laws 200 

extent  of  exclusive  rights  under  patent  laws  200 

violation  of  Anti-trust  law,  is  a  defense  in   suit  to  enforce 

copyright  grant   200,  201 

protection  of  public  is  end  sought  in  Anti-trust  laws  200 

author  and  inventor  concerned  in  enforcement 200,201,203 

genesis  of  application  of  Anti-trust  ideas  to  general  business 

methods    203 

original  authority  for  the  inclusion  of  unfair  business  methods 
by  the  ordinary  industrial  combination,  as  within  the  Anti- 
trust prohibitions 203 


INDEX.  443 

[REFERENCES  ARE  TO  PAGES.] 

PACE 

leaders  in  movement   

benefits  accruing  therefrom    204-205 

inventors  and  authors  share  in  benefits 205 

PATENTED  AND  UNPATENTED  ARTICLES:     See  PAT- 
ENTS AND  COPYRIGHTS;  TYING  CLAUSE. 

PENALTIES: 

for  violation  of  Trade  Commission  Law: 
for  neglecting  or  refusing: 

1.  to  attend  and  testify  257 

2.  to  answer  questions   257 

3.  to  produce  evidence  257 

for  wilfully  making,  etc.  : 

1.  a  false  entry  257,258 

2.  a  false  statement  of  fact  257,258 

for  wilfully  removing  evidence  from  the  U.  S 257,  258 

for  wilfully  mutilating  evidence  257, 258 

for  wilfully  refusing  to  submit  evidence  to  Commission  ..257,258 

against  officer  or  employee  of  Commission  for  making  informa- 
tion   public    258 

for  violation  of  Sherman  Law 279,  280 

for  violation  of  Wilson  Law  282 

for  violations  of  Clayton  Law, — embezzlement  by  officers  of 

common  carrier  266 

for   violations  of   regulations   based  on  interlocking  by  com- 
mon carriers  and  other  companies 267, 268 

persons  liable  to,  for  corporate  crimes 271 

for  contempt  of  court 275,  276,  277 

for  failure  to  obey  court's  order  to  testify,  etc 256 

PERJURY:    See  CRIMES. 

no  person  exempt  from  punishment  for  perjury 257 

PETITION  FOR  PERMISSION  TO  INTERVENE,  ETC.: 

See  FORMS. 

PERSON  OR   PERSONS:     See  DEFINITIONS;    DEFINITION  OF 
TERMS;  CRIMES;  PENALTIES;  DAMAGES. 

definition  of,   considered    96, 97 

definition  has  wide  application  under  Sherman  Law  96,  97 

defined  to  include  corporations  and  associations 260, 281 

subject  to  rule  against  unfair  methods  of  competition 249 

subject  to  prohibitions  against: 

discrimination    

conditional  or  tying  clause  contracts  260,  26 

interlocking   264,  265, 266 

subject  to  estoppel  of  decrees  in  suits  by  United  States  under 
Anti-trust  laws  261 


444  INDEX. 

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PAGE 

subject  to  authority  of  Trade  Commission,  Reserve  Board,  In- 
terstate Commerce  Commission  to  enforce  Clayton  Law 268 

may  have  injunction  to  prevent  violations  of  Anti-trust  laws  . .      272 

subject  to  Wilson  Law  282 

and  Sherman  Law 279,  280 

PETITION  TO  PREVENT  OR  RESTRAIN  VIOLATION 

OF  CLAYTON  LAW:    See  COMMISSION  OR  BOARD. 
district  courts  are  empowered  to  entertain  such  application  at 
the  instance  of  the  respective  district  attorneys,  acting  under 
the  direction  of  the  attorney  general  272 

PHILIPPINE  ISLANDS: 

Clayton  Law  shall  not  apply  to 259 

POSTPONEMENT   OF   OPERATION    OF    PROVISIONS 
OF  SECTION  8  OF  CLAYTON  LAW:     See  BANKS; 
COMMON  CARRIERS;   INTERLOCKING  DIRECTORS. 
occasion   for  postponement,  considered    131,132,133 

POWERS:  See  ATTORNEY  GENERAL;  CIRCUIT  COURT  OF  APPEALS; 
DISTRICT  COURT;  SUPREME  COURT;  FEDERAL  TRADE  COMMIS- 
SION; FEDERAL  RESERVE  BOARD;  INTERSTATE  COMMERCE  COM- 
MISSION; COMMISSION. 

PRESIDENT: 

may  direct  Trade  Commission  to  investigate  and  report  253 

may  direct  departments  and  bureaus  to  place  all  government 
records  at  disposal  of  Trade  Commission  255 

PRESIDENT  OF  CORPORATION: 

embezzlement  of  property  of  common  carrier  by,  a  felony 266 

nature,  extent  and  purpose  of  provision  considered  144,145,146 

PRICE  DISCRIMINATION:    See  DISCRIMINATION  IN  PRICE. 

PRICE  OR  RATE  FIXING  AGREEMENTS:     See  CLAYTON 

LAW;  COMMISSION  OR  BOARD. 

conditions  where  such  agreements  fall  within  general  prohibi- 
tion of  monopolies  20,  260 

PRIM  A  FACIE  EVIDENCE:    See  EVIDENCE. 

when  final  judgment  or  decree  in  action  brought  by  government 
under  Anti-trust  laws,  is  102,  261 

privilege  does  not  obviate  proof  of  damages  by  reason  of  viola- 
tion of  Anti-trust  laws  128 

PRIVATE  BANKER:    See  BANKS;   INTERLOCKING  DIRECTORS. 
regulation  of  dealings  in  securities  of  common  carriers,  dis- 
cussed      .  53-56 


INDEX.  445 

[REFERENCES  ARE  TO  PAGES.] 

FACE 

PRIVATE  RIGHTS  OF  ACTION:    See  DAMAGES. 

PROCEDURE:  See  FEDERAL  TRADE  COMMISSION;  COMMISSION 
OR  BOARD;  CIRCUIT  COURT  OF  APPEALS;  CONTEMPT. 

before  Commission  or  board,  described  39,  40 

PROCESS: 
Service  of 

by  delivering  copy   252,270,271 

by  leaving  copy  252,  270,  271 

by  registered  mail    252, 270,  271 

proof  of  service  of 252,  270, 271 

not  denned  in  the  Anti-trust  laws  129 

affidavit  of  service  of  (see  forms)   237 

PROHIBITIONS  UNDER  CLAYTON  LAW:  See  COMMIS- 
SION OR  BOARD. 

for  general  consideration  of  prohibitions  under  Clayton  Law, 

see    28-38 

prohibitions  concerning  common  carriers,  considered  63,64,65 

PROOF  OF  SERVICE:    See  PROCESS. 

how    made    252,  270,  271 

affidavit  of  service  of  (see  forms)  237 

PROPERTY  OWNED  IN  VIOLATION  OF  LAW  MAY  BE 

CONDEMNED    280,   281 

PROSECUTION  OF  INDIVIDUAL  OFFICERS,  DIREC- 
TOR OR  AGENT  OF  CORPORATIONS:  See  OFFI- 
CERS. 

permitted,  where  they  severally  authorized,  etc.,  corporate  vio- 
lation of  any  penal  provision  of  the  Anti-trust  laws 271 

PROVISIONS  FOR  ENFORCEMENT:  See  FEDERAL  TRADE 
COMMISSION;  COMMISSION  OR  BOARD;  PROHIBITIONS  UNDER 
CLAYTON  LAW;  ORDERS  OF  COMMISSION  OR  BOARD;  INJUNC- 
TION; MANDAMUS;  CONTEMPT;  CRIMES. 

necessity  for  and  means  of  applying,  stated 37,  38 

important  distinction  between  the  Trade  Commission  Act  and 

Clayton  Law  noted  38 

means  of  securing  information  not  specified  38,  39 

for  prohibitions  under  Clayton  Law  and  for  subject  generally, 
see    28-36 

PUBLIC  INTEREST:  See  FEDERAL  TRADE  COMMISSION;  BANKS; 

COMMON  CARRIERS  ;   COMPETITION. 
must  appear,  to  justify  institution  of  proceedings  under  Section 

5  of  Trade  Commission  Act  250 

demands  regulation  of  dealings  by  and  with  common  carriers  . .  55, 56 


446  INDEX. 

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PAGE 

PUBLICATION  OF  COMMISSION'S  REPORTS  AND  DE- 
CISIONS: 

provided  for  254 

PUBLICITY  OF  COMMISSION'S  REPORTS:    See  REPORTS. 
Commission's  reports  as  to  manner  in  which  court  decree  is 
being  carried  out  may  be  made  public  in  Commission's  ,dis- 
cretion    253 

PUBLICITY   OF   INFORMATION   OBTAINED    BY    COM- 
MISSION: 

information,  except  trade  secrets  and  names  of  customers  may 
be  made  public  as  deemed  expedient  in  the  public  interest  . . .  254 

unauthorized  publicity  by  officer  or  employee  of  Commission  a 
misdemeanor  258 

PUBLIC  POLICY: 

contracts  against: 

not  enforcible  at  law  20,  21 

or  in  equity  20,  21,198 

PUBLIC  UTILITIES  CORPORATIONS: 

occasion  for  prohibiting  profits  to  officers,  from  dealings  with  .  55, 56 
RAILROADS:    See  COMMON  CARRIERS. 

designated  by  term  "common  carriers  subject  to  the  Act  to  Reg- 
ulate Commerce,  approved  February  4,  1887"  66 

Interstate  Commerce  Commission  authorized  to  enforce  com- 
pliance with  Sections  2,  3,  7,  and  8  of  Clayton  I/aw,  by  the 
persons  respectively  subject  thereto,  where  applicable  to 268 

excepted  from  prohibition  of  interlocking  directors   66,265 

reason  for  exemption,  as  set  forth  in  committee's  report 35 

provisions  regulating  dealings  in  the  supply,  etc.,  concerns,  con- 
sidered   65,  66,  67 

Interstate  Commerce  Commission  empowered  to  enforce  Sec- 
tion 10  of  Clayton  Law,  by  transmitting  papers  and  findings 
to  attorney  general  67,  68,  69,  266,  267 

REDFIELD,  WILLIAM  C.:    SECRETARY  OF  COMMERCE. 

views  of,  on  need  for  regulation  of  competition  10 

REFUSAL  TO  OBEY  SUBPCENA:    See  CONTUMACY. 
REPORTS: 

of  Trade  Commission : 

to  be  published   254 

as  master  in  chancery  not  conclusive 254,  255 

annual  and  special  reports  to  be  made  to  Congress 254 

reports  to  Attorney  General  as  to  carrying  out  decrees  in 
Anti-trust  cases  253 


INDJJX. 

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PAGE 

on  direction  of  President  or  either  branch  of  Congress, 
Commission  shall  report  as  to  alleged  violations  of  Anti- 
trust acts  by  any  corporation  253 

to  Trade  Commission : 

corporations  to  make  annual  or  special  reports  to 253 

failure  by  corporation  to  file,  when  required  by  Trade  Commis- 
sion, incurs  penalty  of  $100  per  day  136, 258 

falsification,  etc.,  a  crime   135,  257,  258 

necessity  for  correctness  in,  considered   135, 136 

RESTRAINT  OF  TRADE:    See  MONOPOLY;   SHERMAN  LAW. 

illegal    279,  280 

by  corporate  stock  ownership,  illegal  262, 281 

illegal  restraints  may  result  from  joint  acts 104, 105 

price  discriminations,  also  tying  contracts,  etc.,  which  lessen 
competition,  unlawful  260,  261 

RESUBMISSION  TO  COMMISSION: 

no  means  of  review  provided,  where  circuit  court  refuses  to 
permit  45, 46 

Section  240  of  Judicial  Code  probably  permits  review  by  Su- 
preme Court  45 

REVIEW:    See  APPEALS. 

means  of,  provided   40,  251,  252,  269,  270 

Congress  prescribed  limited  review  (viz.,  only  as  to  law)  41 

three  separate  opinions,  with  final  appeal  to  Supreme  Court  ...  41,  42 

REVIEW  OF  ORDERS:    See  CIRCUIT  COURT  OF  APPEALS;   SU- 
PREME COURT. 

RIGHT  TO  BRING  ACTIONS: 

covers  all  violations  of  Anti-trust  laws 125, 126,  261 

RIGHT  TO  REFUSE  TO  DEAL:    See  LABOR. 

subject  considered  in  connection  with  labor  disputes 172-176 

principle  applied  in  dispute  concerning  commercial  dealings  . . .      193 
subject  considered  in  connection  with  questions  involved  in  en- 
forcement of  Section  2  of  Clayton  Law  55, 193, 194 

RULES  OF  PRACTICE  BEFORE  THE  FEDERAL  TRADE 
Commission: 

For  text  of  Rules,  see  232-235 

RULINGS:    See  COMMENDATORY  RULINGS. 
SECRETARY  OF  TRADE  COMMISSION: 

salary  $5,000    247 

SEAGER,  HENRY  R.: 

views  of,  on  need  for  regulation  of  competition  12, 13 


448  INDEX. 

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PAGE 
SEARCHES  AND  SEIZURES:    See  CONSTITUTION;  IMMUNITY. 

unreasonable,  prohibited  under  Fourth  Amendment  of  Consti- 
tution  159,  160,  286 

use  of  subpoena  duces  tecum  confined  to  a  reasonable  dis- 
closure and  surrender  of  corporate  books,  records,  etc 160 

SELF-INCRIMINATION:    See  CONSTITUTION;   IMMUNITY. 

guarantees  of  Fifth  Amendment  of  constitution,  respecting  .... 

156,  157,  158,  286,  287 

conditions   which   confer  immunity   under   Fifth   Amendment, 

stated  156, 157, 158 

SELLER:    See  TYING  CLAUSE. 

exclusive  tying  contracts  by,  when  unlawful  44 

SENATE  COMMITTEE  ON  INTERSTATE  COMMERCE: 

report  by,  on  changes  necessary  or  desirable  in  the  laws  relating 
to  the  creation  and  control  of  corporations  engaged  in  inter- 
state commerce,  Appendix  "M"  304-334 

SERVICE  OF  PROCESS:    See  PROCESS;  FORMS. 

method  of,   described    46 

subject   discussed    129, 130 

SHERMAN  LAW: 

text  of  279-281 

character  of,  described   131 

language  constituting,  commented  upon    100 

definitions  of  "person"  and  "corporation,"  considered  96,  97 

Sherman  Law  declared  to  be  a  criminal  statute 149 

creates  a  new  offense  by  penalizing  acts  not  criminal  under 

common  law   149 

criminal  provisions  of,  discussed   146-149 

largely  superseded  by  regulatory  features  of  Trade  Commis- 
sion Act  and  Clayton  Law  147, 148 

punishment  prescribed  under   149 

rule  applicable,  when  construing,  as  a  criminal  statute  149 

in  effect,  Clayton  Law  is  amendment  of  104 

language  of  Sherman  Law  characterized  104 

joint  restraints  of  trade  declared  illegal  by  104 

liability  under  Sherman  Law  considered : 

individual    104 

corporate    108, 109,  110 

scope  of  liability  enlarged  under  Clayton  Law  109 

Sherman  Law  reinforced  by  Clayton  Law   105 

prohibition  of  unfair  methods  of  competition,  added  by  new 
legislation  105 


INDEX.  449 

[REFERENCES  ARE  TO  PAGES.] 

PAGE 
Sections  2,  3,  7,  and  8  of  Clayton  Law  supplement  Sections  1 

and  2  of  105 

criminal  jurisdiction  of,  extended  by  Clayton  Law  106 

word  "person"  has  wide  application  under  106 

enforcement  of  provisions  of,  by  contempt  proceedings,   per- 
mitted   106 

enforcement  by  contempt  proceedings,  allowed  106 

right  to  litigate  under,  enlarged  by  Clayton  Law  107 

limitation  upon  right  to  pursue  defendants,  continued  in  Clay- 
ton Law   107, 108 

triple-damage  rights,  also  enlarged  by  Clayton  Law 108 

definitions  of  "person,"  compared   108 

inception   of    166 

circumstances  attending  enactment  of   166 

question  of  exempting  labor  from  requirements  of,  raised  and 

debated    166 

comprehensive  language  employed  in   70 

early  application  of  constitution  and  Sherman  Law  compared  . .  70 

principles  of  constitution  expounded  by  framers  71 

no  similar  exposition  of  Sherman  Law  71 

absence  of  exposition  delayed  enforcement  .  >, 71 

principles  and  development  described  71, 72 

general  principles  involved   72 

occasion   for  statutory   relief    72, 73 

centralization  of  business  recognized  and  regulated  72,73 

measure  for  relief  introduced  73,  74 

various  drafts  of,  considered  73, 74 

enactment  of  proposed  measure,  urged 74 

supporting  argument  in  Senate  74,  75 

tentative  measures  further  considered    75,  76,  77 

drafts  of,  express  its  intent  75,  76 

for  tentative  forms  of  Sherman  Law  submitted  to  the  Senate 

for  the  fifty-first  session  of  Congress,  see  Appendix  "K"  ...297-301 

Senate  committee's  definition  of  "monopoly" 

definition  suggestive  of  term  "unfair  methods  of  competition  in 


commerce 


76 


wider  scope  of  proposed  law 

constitutionality  thereof  considered  

scope  and  effect  of  law  as  enacted  77,  78,  79 

consideration  from  general  view  point,  continued 77,  78,  79 

constitutional  questions  involved  in  construction  and  applica- 
tion of  Sherman  Law  have  been  determined  by  Supreme 
Court  

held  to  be  in  conformity  with  the  powers  vested  in  Congress 
by  the  commerce  clause  of  the  constitution 

benefits  derived  from  Sherman  Law 

interpretation  and  application  of 

29 


450  INDEX. 

[REFERENCES  ARE  TO  PAGES.] 

PACE 

socialistic  influences  apparent  in  Anti-trust  legislation  81, 82 

unregulated  competition  effectuates  trusts  82 

limitation  of  relief  to  results  obtained  in  suits  instituted  solely 

by  government,  involves  grave  question 82 

narrowing  construction  of  commerce  clause  feared  in  debates  in 

Congress    82 

decision  in  "Knight"  case  considered   82, 83 

wide  construction  applied  in  legislation  connected  with  Trade 

Commission   83 

foreign  Anti-trust  laws  discussed  in  connection  and  compari- 
son with  the  Sherman  Law  83-86 

Commission  Act  and  Clayton  Law  broaden  means  of  relief  ...        86 
Section  16  of  Clayton  Law  supplies  right  of  individual  initiative  86,  87 

government  initiative  no  longer  essential  87 

earliest  Anti-trust  decision  under  Sherman  Law 87 

reasoning  in  early  English  case  sustained 88 

ingenious  analysis  of  Sections  1  and  2  of  Sherman  Law,  pre- 
sented      88-91 

argument  examined  and  criticized  88-91 

argument  now  controverted  by  controlling  decisions  91 

advantage  definite  ruling  affords  91 

Anti-trust  definitions  of  "commerce"  compared  92 

meaning  of  Sections  1  and  2  discussed  93 

Sections  1  and  2  generally  construed  together  93 

construction  and  application  now  settled  law  93 

Congress  supplements  Anti-trust  decisions   94 

purpose  in  strengthening  Anti-trust  laws  94 

Sections  4  to  8  of  Sherman  Law  considered  94,  95 

violation  by  plaintiff,  of  anti-monopoly  provisions  of,  not  a  de- 
fense to  suit  for  infringement  of  patent  rights 190, 191 

enforcement  of  provisions  of  Anti-trust  laws,  by  suits  of  indi- 
viduals, removes  the  occasion  for  setting  up  defenses  of  this 

nature    190 

for  memoranda  of  Anti-trust  cases  instituted  by  the  United 
States,  (complete  to  October  15,  1915),  see  Appendix  "O"  ..       362 

SHERMAN  LAW  DEFINITIONS  BILL: 

one  of  five  proposed  measures  utilized  by  Congress  when  pre- 
paring Trade  Commission  Act  and  Clayton  Law 138 

SHERMAN,  SENATOR: 

argument  by,  in  support  of  original  Anti-trust  bill  74,  75 

SPECIAL  PROVISIONS  FOR  ENFORCEMENT:  See  PRO- 
VISIONS FOR  ENFORCEMENT;  MANDAMUS;  INJUNCTION;  CON- 
TEMPT; CRIMES. 

mandamus  will  lie  to  compel   Commissions  or  board  to  pass 
upon  matter  within  scope  of  their  several  powers 39 


INDEX.  451 

[REFERENCES  ARE  TO  PAGES.] 

PACE 
SPECIFIC  PERFORMANCE:    See  MONOPOLY. 

enforcement  by,  not  permitted  where  contract  is  against  public 
Policy  20,  21, 198 

SPECIFIC     PRACTICES     FORBIDDEN     BY     CLAYTON 
LAW:    See  CLAYTON  LAW;   COMMISSION  OR  BOARD. 

enumerated : 

price  discrimination  260 

tying  contracts,  etc 260,  261 

corporate  stock  ownership  in  one  or  more  competing  cor- 
porations     262,  263 

interlocking  directorships 264,  265 

STATE  LAWS:    See  IMMUNITY. 

disobedience  of   order  of  court   constituting  criminal   offense 

under  Federal  or  State  laws,  punishable  by  contempt 275 

judgment  of  conviction  or  acquittal  on  the  merits  under  state 
laws  shall  bar  prosecution  under  Clayton  Law  for  the  same 

act    266 

immunity  in  federal  courts  does  not  protect  witness  when  prose- 
cuted for  infractions  of 156 

STATUTE  OF  LIMITATIONS:    See  LIMITATIONS. 

suspended  during  pendency  of  government  proceedings  under 
Anti-trust  laws    102,  261,  262 

STATUTES:    See  STATUTE  OF  LIMITATIONS  ;  CONSTRUCTION. 

STOCK  OWNERSHIP  BY  ONE  CORPORATION  IN  AN- 
OTHER:   See  BANKS;  COMMON  CARRIERS;  CORPORATIONS. 
prohibited  in  whole  and  in  part  where  competition  is  lessened, 
commerce  restrained,  or  a  tendency  to  monopolize  created  .  .262,  263 

prohibition  does  not  impair  previously  acquired  rights  263 

for  investment,  not  prohibited 263 

in  subsidiary  corporations,  not  prohibited  263 

in  branch  lines  by  common  carriers  permitted  263 

prohibitions  and  regulations  of  Clayton  Law,  considered 101 

violations  charged  wkh  liability  to  actions  for  three-fold  dam- 
ages      101 

exceptions  contained  in  prohibiting  clauses  101 

STRICT  CONSTRUCTION:    See  CONSTRUCTION. 

applied  to  chartered  rights  of  monopoly 

STRIKE:    See  LABOR. 

denned 172 

SUBJECT  TO  ACTS: 

Clayton  Law  and  Sherman  Law: 

associations  existing  under  the  laws  of  the  United  States 


4S2  INDEX. 

[REFERENCES  ARE  TO  PAGES.] 

PAGE 

or  any  State  or  Territory  or  foreign  country 260,  281 

corporations  existing  under  the  laws  of  the  United  States 

or  any  State  or  Territory  or  foreign  country 260,281 

persons    260,  281 

Trade  Commission  Act: 

associations  for  profit  incorporated  or  unincorporated,  ex- 
cept  partnerships    248 

companies   for  profit  incorporated  or  unincorporated,  ex- 
cept  partnerships    248 

corporations  for  profit  with  or  without  capital  shares  248 

partnerships  subject  to  Section  5   249 

persons  subject  to  Section  5  249 

Wilson  Law: 

corporations    282 

persons    282 

SUPERVISION: 

of  methods  of  competition  in  general  business,  desired  5,  6 

SUPPLY,     CONSTRUCTION     AND     FINANCIAL     CON- 
CERNS:   See  PROHIBITIONS  OF  CLAYTON  Bnj,;   COMMISSION 
OF  BOARD;   BANKS;   COMMON  CARRIERS. 
regulation  of  dealings  with  common  carriers  considered 65,  66,  67 

SUBPOENAS:    See  FORMS. 

May  be  issued 

by  Trade  Commission    255,  270 

by  court    271,  280,  283 

service  of,  discussed   129 

attendance  of  witnesses,  considered  130 

SUBSIDIARY  CORPORATIONS: 

corporation  may  own  stock  in  263 

SUBSTANTIAL    LESSENING    OF    COMPETITION:      See 

COMPETITION. 

by  price  discrimination,  unlawful  260 

subject    discussed 28, 193, 194 

by  tying  contracts  unlawful 260,  261 

by  stock  ownership  by  one  corporation  in  another,  unlawful  . . .       262 

by  stock  ownership  by  "holding"  companies,  unlawful  262 

stock  ownership  for  investment  not  resulting  in,  lawful 263 

stock   ownership  in   subsidiary   corporations   not   resulting  in, 

lawful 263 

in  absence  of  substantial  competition,  common  carriers  may  own 

stock  of  branch  lines  263 

interlocking    (other   than    between    banks,    and    common    car- 


INDEX.  453 

[REFERENCES  ARE  TO  PAGES.] 

PAGE 

riers)  prohibited  between  competitors  if  elimination  of  com- 
petition by  agreement  would  violate  Anti-trust  laws  265 

SUPPLEMENTAL  ANTI-TRUST  ACT  (also  known  as  Clay- 
ton Law  or  Supplemental  Sherman  Law)    259-278 

SUPREME  COURT:    decree  of  circuit  court  of  appeals  review- 
able  upon  certiorari  251,  269 

for  text  of  Section  240  of  Judicial  Code,  containing  provision 
authorizing  such  review,  see  Appendix  "I" 291 

TEMPORARY  RESTRAINING  ORDER:    See  COMMISSION. 

provisions   for    272,  273,  274,  275,  280,  282,  283 

TERMS,  DEFINITIONS  OF:    See  DEFINITIONS. 

inventors'  and  authors'  exclusive  rights  17 

"person"  as  defined  in  Clayton  Law  127 

definitions  of  "person"  and  "corporation"  considered  96,97 

definitions  of  "person"  and  "corporation"  compared  108 

"engaged  in  commerce  as  a  common  carrier"    (Section  9  of 

Clayton    bill) 144, 145 

"any  common  carrier  subject  to  the  laws  to  regulate  commerce," 

meaning  and  scope  defined  64,  65 

"common  carriers  subject  to  the  act  to  regulate  commerce,  ap- 
proved February  4,  1887"    66 

good    will    207 

right  (of  State)  to  limit  individual  rights  81 

TEST  OF  FITNESS: 

not   a   monopoly 17, 18 

TESTIMONY:    See  EVIDENCE;   FORMS. 

no  person  excused  from  testifying  257 

testimony  at  hearing  shall  be  taken  in  writing  250,  268 

THREE-FOLD  DAMAGE  RIGHT: 

enlarged  by  Clayton  bill 108 

TOWNE,  HENRY  R.: 

views  of,  on  need  for  regulation  of  competition  

TRADE  COMMISSION:    See  FEDERAL  TRADE  COMMISSION. 

TRADE  COMMISSION  LAW:  246-258 

TRADE  CONDITIONS:    See  FEDERAL  TRADE  COMMISSION. 

in  and  with  foreign  countries,  Trade  Commission  has  power  to 

investigate 

TRADE  DISPUTES:    See  LABOR;  TRADES  UNIONS. 

special  limitations  as  to  injunctive  relief  in  119,120 


454  INDEX. 

[REFERENCES  ARE  TO  PACES.] 

PAGE 

TRADE  RELATIONS  BILL: 

one  of  five  proposed  measures  utilized  by  Congress  when  pre- 
paring Trade  Commission  Act  and  Clayton  Law  138 

TRADERS: 

Trade  Commission  has  power  to  investigate  and  make  recom- 
mendations to  Congress  concerning  foreign  trade 254 

TRADE-MARKS  AND  TRADE  NAMES:  See  PATENTS  AND 
COPYRIGHTS;  TYING  CLAUSE;  ANTI-TRUST  LAW  ;  ANTI- 
TRUST POLICY  ;  UNFAIR  TRADING  ;  UNFAIR  METHODS  OF  COM- 
PETITION : 

unfair  trading  in  relation  to,  an  ancient  problem 206 

experience  adjusts  problems 200 

monopoly  an  incident  to  chartered  companies 206 

good  will  a  topic  of  wide  significance  207 

good   will    defined    / 207 

government  offers  monopoly  to  induce  disclosure 207 

attacks  on  originator's  rights  considered  207 

unfair  trading  includes  unfair  copying   207 

foreign  terms  for  unfair  trading 208 

ancient  penalty  severe   208 

law  of  infringement  a  slow  development   208 

trade-protection  in  United  States  209 

long  delay  required 209 

general  requisites  for  protection  210 

deceptive  words  and  phrases .: 210,  211 

misuse  of  names  of  places  210,  211 

long  use  pre-empts  name  211 

false  use  of  name  illicit  212 

right  to  protection  established  212 

misuse  of  names  of  persons  213 

recent  rulings  incline  to  lenity 213,  214 

relief  should  fit  individual  needs   214 

misuse  of  descriptive  terms  214,  215 

English  rule  now  recognized  and  established  in  United  States  .       215 

deceptive  labels  and  packages   215 

unfair  substitution    215,  216 

sound  sense  essential  to  just  rulings 216 

leading  cases  illustrative  of  above  principle 216,  217,  218 

imitators  not  respectors  of  persons  217 

petitioner  must  come  with  "clean  hands"  218 

imitators  display  endless  ingenuity  218,  219 

absence  of  statutory  definition  of  "unfair  methods,"  explained  .      218 
elastic  term  required  to  meet  and  overcome  novel  forms  of  un- 
fairness           218 

some  forms  of  deceit  enumerated  .  219 


INDEX.  455 

[REFERENCES  ARE  TO  PAGES.] 

PAGE 

principles  of  fair  dealing  constitute  sole  guide 219 

appropriate  judicial  rulings  219,  220 

development  of  unfair  competition  law  221 

general  conclusion  deduced  from  authorities  221 

TRADE  SECRETS: 

not  to  be  divulged  by  Trade  Commission  23,  254 

TRADES  UNIONS:    See  LABOR. 

equality  of,  and  corporations,  noted   169 

operate  by  distinctive  methods  171, 182 

TRANSCRIPT: 

of  the  record,  filed  with  Circuit  Court  of  Appeals,  upon  applica- 
tion to  enforce  order  to  cease  and  desist  250 

similar  filing  required,  upon  review  thereof  by  court 251 

for  corresponding  provisions  of  Clayton  Law,  see 269,270 

TRIPP,  GUY  E.: 

views  of,  on  need  for  regulation  of  competition  11, 12 

TRUST  COMPANIES:    See  BANKS;   INTERLOCKING  DIRECTORS. 
TRUSTS:    See  MONOPOLIES. 

in  restraint  of  import  trade,  unlawful  > 282 

in  restraint  of  all  foreign  and  domestic  trade,  unlawful 279,280 

and    monopolies,    distinguished    from   exclusive   rights   of   in- 
ventors and  authors  17 

TYING  CLAUSE:    See  PROHIBITIONS  OF  CLAYTON  LAW;  UNFAIR 

METHODS  OF  COMPETITION. 
contracts,    etc.,    substantially    lessening    competition    by    tying 

clauses,  unlawful 260,  261 

patented  and  unpatented  articles  alike  subject  to  260,261 

UNFAIR     METHODS     OF     COMPETITION     IN     COM- 
MERCE:   See  COMPETITION. 

Trade  Commission  empowered  to  prevent  249 

problems  involved  in  elimination  of,  enumerated  8 

myriad  forms  of,  described  9 

imitators  display  endless  ingenuity  in  efforts  to  elude  proprietor's 

rights  in  trade-marks  and  trade  names 218-221 

great  variety  of  unfair  methods  employed  in  manipulations  of 

corporate   control,    described    225 

inventors  and  authors   derive  benefit   from   measures  to  pre- 
vent  201-205 

Clayton  Law  provides  relief  supplementing  provisions  of  Sher- 
man  Law    112 

UNFAIR  TRADING:     See  COMPETITION;    UNFAIR  METHODS  OF 
COMPETITION;  FEDERAL  TRADE  COMMISSION ;  PROHIBITIONS  OF 


456  INDEX. 

[REFERENCES  ARE  TO  PAGES.] 

PAGE 

CLAYTON  LAW;  COMMISSION  OR  BOARD;  PATENTS  AND  COPY- 
RIGHTS ;  TRADE-MARKS  AND  TRADE  NAMES  ;  ABUSES  OF  COR- 
PORATE CONTROL. 

UNCONSTITUTIONALLY     OF     ANY     PORTION     OF 
CLAYTON  LAW: 

shall  not  invalidate  any  other  portion  thereof  278 

VANDERSLIP,  F.  A.: 

opinion  of,  on  needs  in  banking 13, 14 

VAN  HISE,  CHARLES  R.: 

views  of,  on  need  for  regulation  of  competition 10 

VENUE:    See  CIRCUIT  COURT  OF  APPEALS;   DISTRICT  COURT. 

VERBAL  ERROR: 

comma  retained  by  mistake  in  Section  5,  Federal  Trade  -Com- 
mission Act  249 

VERIFIED  BILL: 

or  affidavit,  required  to  show  necessity  for  relief  upon  applica- 
tion for  temporary  restraining  order   273 

WILSON  TARIFF  LAW: 

for  text  of  Sections  73  to  77,  see 282,  283 

relates  solely  to  import  trade  131 

provides  Anti-trust  regulation  of  foreign  trade   149,150 

Sherman  Law  Anti-trust  provisions  reappear  in  150 

considered  as  a  criminal  statute 149, 150 

Section  73  thereof,  not  adjudicated  150 

WITNESSES:    See  CONTUMACY;   IMMUNITY;    RULES  OF  PRACTICE. 

fees  and  mileage  to  be  paid  256 

self-incrimination  not  to  excuse  failure  to  testify  257 

immunity  granted   to    257 

failure  to  testify  punishable  by  fine  and  imprisonment  257 

may  be  compelled  to  testify  271 

may  be  subpoenaed  into  other  districts 129,  271 

procedure  for  compelling  attendance  of,  discussed   129,130 

falsification  of,  or  failure  to  produce  corporate  records,  pun- 
ishable by  fine  and  imprisonment  257,  258 

writs  of  mandamus  authorized  to  compel  obedience  to  Trade 

Commission's  orders  and  to  provisions  of  Act 256 

exemption  from  prosecution  in  Federal  courts  does  not  afford 

immunity  in  State  courts   156 

must  claim  privilege  to  obtain  immunity  157 

proceeding  must  be  within  scope  of  jurisdictional  powers  of 
court  or  body  conducting  enquiry  157, 158 


INDEX.  x    457 

[REFERENCES  ARE  TO  PAGES.] 

PAGE 

resistance  by  witness  not  required  to  secure  immunity 161, 162 

decision  cited  holding  that,  when  charged  with  contumacy,  wit- 
ness may  secure  release  on  habeas  corpus  164 

WRIT  OF  ERROR:    See  APPEAL. 

granting  thereof  stays  execution  and  entitles  defendant  to  be 
admitted  to  bail  upon  appeal  from  conviction  in  contempt 
proceeding  instituted  under  Section  22  of  Clayton  Law 277 

WRITS  OF  MANDAMUS:    See  DISTRICT  COURTS. 

upon  application  of  attorney  general  made  upon  request  of 
Trade  Commission,  may  be  issued  to  compel  obedience  to  pro- 
visions of  Act  or  Commission's  order 256 


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UNIVERSITY  OF  CALIFORNIA 
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UNIVERSITY  OF  CALIFORNIA  LIBRARY 

Los  Angeles 

This  book  is  DUE  on  the  last  date  stamped  below. 


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MAY  1 5 


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